IRS Announces Special Per Diem Rates Effective October 1, 2026

The IRS has issued Notice 2026-60, updating the special per diem rates that taxpayers can use to substantiate the cost of lodging, meals, and incidental expenses when traveling away from home for business. The new rates take effect October 1, 2026, and supersede last year’s Notice 2025-54.

Per diem rates offer a simplified alternative to tracking and documenting actual travel costs. Rather than saving every receipt, employers and employees can reimburse — and self-employed taxpayers can deduct — travel expenses using a fixed daily allowance.

2026–2027 High-Low Per Diem Rates

For taxpayers using the high-low substantiation method, the full daily rate (lodging plus meals and incidental expenses) is:

Of those totals, the portion treated as paid for meals is $86 per day for high-cost localities and $74 per day for all other localities within the continental U.S.

Other Rates Under Notice 2026-60

• Meals and incidental expenses (M&IE) only: $86 for high-cost localities and $74 for all other localities.
• Transportation industry M&IE: $80 per day for travel within the continental U.S. and $86 per day for travel outside the continental U.S.
• Incidental expenses only: $5 per day for any locality.

Watch the High-Cost Locality List

Each year the IRS updates which locations qualify as “high-cost” (generally, a federal per diem rate of $280 or more). Several localities changed the portion of the year they are treated as high-cost under the new notice, including Napa and South Lake Tahoe, California; Aspen, Steamboat Springs, and Telluride, Colorado; New York City; Philadelphia; and Hilton Head, South Carolina, among others.  A destination that was high-cost year-round last year may now qualify only during certain months, so confirm the dates of travel before applying the higher rate.

How the New Per Diem Rates May Affect You

The updated rates may impact:

• Employers reimbursing employees for business travel under an accountable plan
• Employees receiving per diem allowances
• Self-employed individuals deducting travel costs
• Taxpayers in the transportation industry

A few points to keep in mind:

• Transition rules apply for the last three months of 2026. If you used the 2025–2026 rates for an employee earlier in the calendar year, you generally must continue those rates through December 31, 2026, before switching to the new rates.
• Per diem is a substantiation shortcut, not an expanded deduction. The method replaces receipt-by-receipt recordkeeping; it does not change the 50% limit on business meals or other deduction rules.
• Self-employed taxpayers may use the per diem method for meals and incidental expenses but not for lodging — actual lodging costs must still be documented.

Questions About the New Per Diem Rates?

If you have questions about the 2026–2027 per diem rates, travel reimbursement, or how these changes affect your business or tax situation, contact your Wilkins Miller advisor. Our tax professionals can help you determine whether the per diem method is right for you and ensure your travel expenses are properly documented.