Special Per Diem Rates Update for 2024!
The Internal Revenue Service (IRS) has recently issued Notice 2023-68, and it carries significant implications for businesses, especially those in the transportation sector. This notice, which announces the special per diem rates for 2024, is set to take effect on October 1, 2023. Understanding these updated rates is crucial for businesses that rely on per diem allowances for their employees, particularly those in the transportation industry.
The Basics: Special Per Diem Rates
Per diem rates are daily allowances provided to employees or individuals to cover expenses while traveling for work. These allowances typically include meals and incidental expenses (M&IE). The IRS sets specific per diem rates that businesses can use to reimburse their employees without these payments being treated as taxable income.
Unchanged M&IE Rates
For the year 2024, the IRS has decided to maintain the M&IE rates at the same levels as those in 2023. This means that the daily per diem rates for transportation special M&IE expenses with remain as follows:
Continental United States (CONUS): $69 per day for any locality of travel within the continental United States.
Outside the Continental United States (OCONUS): $74 per day for any locality of travel outside the continental United States.
This decision to keep M&IE rates steady offers predictability for businesses and employees when it comes to calculating and managing travel expenses within the United States and abroad.
High-Low Substantiation Method Adjustment
For motor carriers employing the High-Low Substantiation Method, there are noteworthy changes. This method involves using a higher daily rate for travel to high-cost localities and a lower rate for travel to any other locality within CONUS.
In 2024, the rates for this method have been adjusted as follows:
High-Cost Localities (CONUS): The rate increases from $297 to $309 per day.
All Other Localities within CONUS: The rate increases from $204 to $214 per day.
These adjustments are essential for businesses that operate in areas with significantly higher living and operating costs. By recognizing these disparities, the IRS helps ensure that employees in such regions receive adequate per diem allowances to cover their expenses.
Staying Informed
In an ever-changing tax regulatory landscape, staying informed about IRS notices like 2023-68 is crucial for businesses. Compliance with per diem rates and regulations not only ensures that employees are appropriately reimbursed for their work-related travel expenses but also helps businesses manage their tax liabilities effectively.
Businesses should consider reviewing their travel expense policies and reimbursement procedures in light of these updated rates to ensure continued compliance. It’s also advisable to consult with tax professionals or financial advisors who specialize in this area to optimize your business’s tax planning and reporting.
For the full details of Notice 2023-68, please refer to the official IRS document here.
As the effective date of these changes approaches, businesses should take proactive steps to adapt to the new rates and regulations, ultimately streamlining their travel expense processes and supporting their employees in their work-related journeys.
Written by Mike Ritzema
Before founding Superior Trucking Payroll Service, Mike was the CFO of a trucking company with 80 trucks and a thriving brokerage. This experience gave him the perspective that a payroll solution has to make the lives of the office people better. All the solutions he has designed are to benefit everyone. Our company mission is to help trucking families and that includes the company owners, the drivers, and the office.