2020 Per Diem Rate

This annual notice provides the 2019-2020 special per diem rates for taxpayers to use in substantiating the amount of ordinary and necessary business expenses incurred while traveling away from home, specifically (1) the special transportation industry meal and incidental expenses (M&IE) rates, (2) the rate for the incidental expenses only deduction, and (3) the rates and list of high-cost localities for purposes of the high-low substantiation method.

The following localities have a federal per diem rate of $248 or more, and are high-cost localities for all of the calendar year or the portion of the calendar year specified in parentheses under the key city name.

a. The following localities have been added to the list of high-cost localities: Mill Valley/San Rafael/Novato, California; Crested Butte/Gunnison, Colorado; Petoskey, Michigan; Big Sky/West Yellowstone/Gardiner, Montana; Carlsbad, New Mexico; Nashville, Tennessee; Midland/Odessa, Texas. b. The following localities have changed the portion of the year in which they are high-cost localities: Napa, California; Santa Barbara, California; Denver, Colorado; Vail, Colorado; Washington D.C., District of Columbia; Key West, Florida; Jekyll Island/Brunswick, Georgia; New York City, New York; Portland, Oregon; Philadelphia, Pennsylvania; Pecos, Texas; Vancouver, Washington; Jackson/Pinedale, Wyoming. c. The following localities have been removed from the list of high-cost localities: Los Angeles, California; San Diego, California; Duluth, Minnesota; Moab, Utah; Virginia Beach, Virginia.

The amount of the $297 high rate and $200 low rate that is treated as paid for meals for purposes of § 274(n) is $71 for travel to any high- cost locality and $60 for travel to any other locality within CONUS.

Both of these methods are explained below. But, regardless of the method you use, you generally can deduct only 50% of the unreim- bursed cost of your meals.

The special M&IE rates for taxpayers in the transportation industry are $66 for any locality of travel in the continental United States (CONUS) and $71 for any locality of travel outside the continental United States (OCONUS).

This notice is effective for per diem allowances for lodging, meal and incidental expenses, or for meal and incidental expenses only, that are paid to any employee on or after October 1, 2019, for travel away from home on or after October 1, 2019.

Travel for days you depart and return. For both the day you depart for and the day you re- turn from a business trip, you must prorate the standard meal allowance (figure a reduced amount for each day). You can do so by one of two methods. • Method 1: You can claim 3/4 of the stand- ard meal allowance.

Per diem allowance more than federal rate. If your employer's accountable plan pays you an allowance that is higher than the federal rate, you don’t have to return the difference be- tween the two rates for the period you can prove business-related travel expenses. How- ever, the difference will be reported as wages on your Form W-2. This excess amount is con- sidered paid under a nonaccountable plan (dis- cussed later).

There is no optional standard lodging amount similar to the standard meal al- lowance. Your allowable lodging ex- pense deduction is your actual cost. Who can use the standard meal allowance. You can use the standard meal allowance whether you are an employee or self-employed, and whether or not you are reimbursed for your traveling expenses.

You must complete Form 2106 and itemize your deductions to deduct your expenses for travel, transportation, or non-entertainment-re- lated meals. Your meal and entertainment ex- penses will be subject to the 50% limit dis- cussed in chapter 2. Form 2106 is only used by Armed Forces reservists, qualified performing artists, fee-basis state or local govern- ment officials, and employees with impair- ment-related work expenses.