IRS Increases Special Per Diem Rates for Travel Expenses

Starting October 1, 2026, taxpayers using the per diem substantiation method for business travel expenses will see higher rates under IRS Notice 2026-60. The annual update applies to travel within the continental United States (CONUS) and includes changes to the high-low substantiation method and the list of designated high-cost localities.

Key Changes

Under the updated rates:

• High-cost localities: The per diem rate increases to $329, up from $319.
• Non-high-cost localities: The rate increases to $230, up from $225.
• Meals allocation: The portion treated as paid for meals remains $86 for high-cost localities and $74 for all other localities within the continental United States.

High-Low Substantiation Method

The high-low substantiation method allows employers and other payers to use one of two standardized per diem rates instead of individual federal rates for each travel destination. The higher rate applies to designated high-cost localities, while the lower rate applies to other locations within the continental United States.

For the period beginning October 1, 2026, the rates are:

• High-cost localities: $329 per day
• All other CONUS localities: $230 per day

A locality is considered high-cost under Notice 2026-60 when its federal per diem rate is $280 or more.

The IRS also revised the list of high-cost localities for the 2026-2027 period. Tucson, Arizona; San Mateo/Foster City/Belmont, California; Albuquerque, New Mexico; and Cody, Wyoming, were added to the list, while Panama City, Florida, was removed. Several other locations have changes to the portion of the year during which they qualify as high-cost localities.

Transportation Industry Rates

For taxpayers in the transportation industry, the special meals and incidental expenses rates remain unchanged:

• $80 for travel within the continental United States
• $86 for travel outside the continental United States

The incidental expenses rate also remains $5 per day for travel within or outside the continental United States.

The updated rates are effective October 1, 2026, through September 30, 2027. Businesses that use per diem allowances should review the new rates and updated high-cost locality designations as they prepare for travel during the coming year.

Prepare for the Updated Per Diem Rates

For more information about the updated per diem rates and how they may affect your business, contact your CRI advisor. They can provide the personalized guidance and support needed to ensure compliance with the updated IRS regulations.