IRS Increases Business Travel Per Diem Rates for 2026-2027 Fiscal Year
The Internal Revenue Service issued Notice 2026-60, increasing the special per diem rates used to substantiate business travel expenses for the upcoming fiscal cycle starting October 1. The updated rates apply to payments made under the per diem substantiation method, which allows employers and taxpayers to streamline recordkeeping for lodging, meals, and incidental expenses incurred during business travel within the continental United States.
Under the revised high-low substantiation method, the allowance for travel to designated high-cost continental United States localities will increase from $319 to $329 per day. For all other non-high-cost continental areas, the rate will rise from $225 to $230 per day. The meal portions treated as subject to business meal expense limitations under Section 274(n) remain unchanged at $86 per day for high-cost destinations and $74 per day for all other localities.
The notice maintains existing rates for specific specialized categories. For the transportation industry, the special meals and incidental expenses rate remains $80 for travel within the continental United States and $86 for travel outside the continental boundary. Furthermore, the standalone rate designated for incidental expenses stays at $5 per day for both domestic and international trips.
Business owners, corporate travel administrators, and self-employed individuals utilizing per diem substantiation should update their expense accounting systems before the October 1 effective date. Taxpayers relying on the high-low method must also review the IRS updated list of high-cost areas, as locations qualify for high-cost status if their individual federal per diem rate meets or exceeds $280. Updating baseline rates ensures travel reimbursements remain non-taxable to employees and compliant with administrative expense policies.
These updated figures remain applicable through September 30, 2027. Taxpayers intending to deploy these standard per diem figures must strictly adhere to the operational guidelines set forth in Revenue Procedure 2019-48. Accounting teams should verify that expense software reflects the modified reimbursement caps for travel taking place on or after the effective date to avoid administrative discrepancies during tax preparation.
Source: Journal of Accountancy
