IRS Declares Particular Per Diem Charges for Travel Away From Dwelling Beginning October 1, 2025

The IRS has introduced particular per diem charges that can be utilized to substantiate the quantity of enterprise bills incurred for journey away from residence on or after October 1, 2025. (Notice 2025-54, Sept. 23, 2025) Employers utilizing these charges to set per diem allowances can deal with sure classes of journey bills as substantiated with out requiring that staff show the precise quantity they spent. (Employees should nonetheless substantiate the time, place, and enterprise function of their journey bills.) The quantity deemed substantiated would be the lesser of the allowance really paid or the relevant per diem charge for a similar set of bills. This discover, which replaces IRS Notice 2024-68, declares charges and the checklist of high-cost localities to be used below the non-compulsory high-low substantiation methodology, particular charges for transportation business employers, and the speed for taxpayers taking a deduction just for incidental bills. General steerage issued in 2019 concerning using per diems after the Tax Cuts and Jobs Act stays in impact.

For journey throughout the continental United States, the non-compulsory high-low methodology designates one per diem charge for all high-cost places and one other for all different places. Employers can use the high-low methodology for substantiating lodging, meals, and incidental bills, or for substantiating meal and incidental bills solely (M&E). Beginning October 1, 2025, the high-low per diem charge that can be utilized for lodging, meals, and incidental bills stays at $319 for journey to high-cost places and $225 for journey to different places. The high-low M&E charge stays at $86 for journey to high-cost places and $74 for journey to different places. There are not any modifications to the checklist of high-cost places or to the calendar intervals for these places for the interval October 1, 2025, to September 30, 2026.

While self-employed individuals can’t use the high-low methodology, they might use different per diem charges to compute the quantity of their enterprise expense deduction for enterprise meals and incidental bills (however not lodging), or for incidental bills alone. (Employees can not deduct their unreimbursed bills as a result of suspension of miscellaneous itemized deductions (as established by the Tax Cuts and Jobs Act and made everlasting by the Act (previously known as the One Big Beautiful Bill or OBBB)), so these different charges are successfully unavailable to them.) The particular charge for the incidental bills deduction is unchanged at $5 per day.

EBIA Comment: The per diem guidelines can vastly simplify the method of substantiating enterprise journey expense quantities. If the quantity of an allowance is deemed substantiated as a result of it doesn’t exceed the relevant restrict, any unspent quantities should not have to be taxed or returned. If an employer pays per diem allowances that exceed what’s deemed substantiated, nevertheless, the employer should both deal with the surplus as taxable wages or require precise substantiation. If substantiation is required, any unsubstantiated portion of the allowance should be returned or handled as taxable wages. For extra info, see EBIA’s Fringe Benefits guide at Section XXI.G (“Travel Expense Reimbursements: Substantiation”).

Take your tax and accounting analysis to the following stage with Checkpoint Edge and CoCounsel. Get prompt entry to AI-assisted analysis, expert-approved solutions, and cutting-edge instruments like Advisory Maps and State Charts. Try it at this time and rework the way in which you’re employed! Subscribe now and uncover a wiser option to discover solutions.