Business Travel Reimbursement Allowance Increased by IRS
Audio version available here (1 min. 40 sec)
The per diem substantiation method is a standardized way for employers to compensate their employees for expenses incurred during business travel. Rather than collecting receipts from an employee and reimbursing them, the per diem rate is a fixed amount to be reimbursed. Every year, the IRS adjusts the special per diem rate of business travel expenses. On October 1st, 2024, the new rates will go into effect.
There are two categories to determine the per diem rate for reimbursement: high-cost localities and non-high-cost localities. The list of high-cost localities can be found in our IRS source below. It has been updated to include Los Angeles, California once again after it was removed for the 2023-2024 year. These localities are all within the continental United States.
For high-cost localities, the per diem rate allowance is $319, of which $86 is “treated as paid for meals”. The rate has gone up from last year’s $309. For non-high-cost localities, the per diem rate was previously $214, but has now been raised to $225, with $74 allocated for meals. For all localities within and outside the continental US, the incidental expenses rate is $5 per day.
It should be noted that those in the transportation industry have special rates. Meals and incidental expenses for any locality within the continental United States have a rate $80 per diem. Meanwhile, travel outside the continental United States has a rate of $86.
Business owners need to be carefully aware of these rates if their employees engage in business travel, as it could affect your reimbursement strategy. If you are not sure if the special per diem allowance or the actual expenses reimbursement methods are better for your business, you should reach out to a tax professional for guidance. At XQ CPA, our CPAs and Certified Tax Coaches would love to help you. Simply give us a call or schedule a consultation online at the link below.
Phone: 832-295-3353
Online Booking: https://xqcpa-bookme.acuityscheduling.com/schedule.php
Sources:
Want to pay less taxes? Read XQ CPA's official tax planning guidebook! How to Grow Your Wealth Through Tax Planning.
コメント