IRS Announces 2026 and 2027 Per Diem Rates for Business Travel

Effective October 1, 2026

The IRS has released Notice 2026-60, which updates the special per diem rates businesses may use to substantiate qualifying travel expenses. The new rates apply to eligible business travel on or after October 1, 2026. The high-low rate increases, several locations join the high-cost list, and Panama City, Florida, is removed from it.

These rates matter to employers that reimburse employees for lodging, meals, and incidental expenses, as well as business owners and certain self-employed individuals who travel away from their tax home. Per diem rules can simplify substantiation, but they do not eliminate the need to document the date, location, and business purpose of each trip.

What Changed for 2026 and 2027

Under the high-low method, an employer uses one daily rate for destinations the IRS classifies as high-cost and another rate for all other locations within the continental United States. This can be simpler than tracking a separate federal rate for every travel destination.

The New High-Low Per Diem Rates

For qualifying travel beginning October 1, 2026, the high-low substantiation rates are:

• $329 per day for travel to a high-cost locality
• $230 per day for travel to any other locality within CONUS

Of those totals, $86 is treated as meals and incidental expenses for a high-cost locality, and $74 is treated as meals and incidental expenses for other CONUS locations. The usual federal limitation on the deduction for business meals may apply.

The IRS also raised the rate used to determine whether a destination qualifies as a high-cost locality. A location generally appears on the new list when its federal per diem rate is $280 or more, compared with $272 under the prior notice.

Changes to the High-Cost Locality List

Locations Added

• Tucson, Arizona
• San Mateo, Foster City, and Belmont, California
• Albuquerque, New Mexico
• Cody, Wyoming

Location Removed

• Panama City, Florida

Seasonal Periods Changed

The IRS changed the months during which 16 locations are treated as high-cost: Napa, South Lake Tahoe, Yosemite National Park, Aspen, Steamboat Springs, Telluride, Fort Myers, Falmouth, Toms River, New York City, Philadelphia, Hilton Head, Manchester, Montpelier, Port Angeles, and Port Townsend. The notice also corrects the seasonal period for Sun Valley and Ketchum, Idaho.

What Florida Businesses Should Know

Two Florida changes deserve special attention. Fort Myers remains a high-cost locality from January 1 through April 30, extending its prior high-cost period by one month. Panama City is no longer on the high-cost list.

Other Florida destinations continue to qualify only during the periods listed in Notice 2026-60. Tampa and St. Petersburg, for example, are high-cost localities from February 1 through April 30, while Key West remains high-cost throughout the year. Businesses should confirm both the destination and the travel dates before selecting a rate.

Per Diem Does Not Replace All Recordkeeping

A per diem method can substantiate the amount of certain travel expenses, but the traveler still must establish the business purpose, date, and location of the trip. Employers using an accountable plan should require timely expense reports and the return of any excess reimbursement when applicable.

Payments at or below the applicable federal rate generally are not treated as employee wages when the accountable-plan requirements are satisfied. Payments can become taxable when the employee does not adequately account for the trip, receives a flat allowance without reporting the required details, or keeps an excess reimbursement.

Self-employed individuals should also be careful with the rules. IRS guidance allows a self-employed person to use a per diem method for meals and incidental expenses, but not as a substitute for substantiating lodging expenses.

Steps Employers Should Take Before October 1

1. Update reimbursement schedules. Replace the prior high-low rates with $329 and $230 for qualifying travel on or after October 1, 2026.
2. Review destination classifications. Check newly added and removed localities, along with seasonal date changes, before approving travel reimbursements.
3. Confirm accountable-plan procedures. Require employees to document the date, place, and business purpose of travel within a reasonable period.
4. Apply the transition rules consistently. Businesses may have a transition choice for the final three months of calendar year 2026, but the selected method must follow the consistency requirements in Revenue Procedure 2019-48.
5. Keep travel policies current. Update written policies, payroll instructions, accounting software, and employee guidance so reimbursements are handled consistently.

How Kamish & Associates Can Help

Travel reimbursements can affect payroll reporting, business deductions, and employee taxable income. Kamish & Associates can help your business review its accountable plan, update reimbursement procedures, and apply the new rates correctly. Contact our office before the new rates take effect if your business regularly reimburses employees for travel.

Important note: This article provides general information and is not a substitute for advice based on your specific tax situation. Per diem treatment depends on the facts, the reimbursement arrangement, and compliance with IRS substantiation rules.

Official Sources

• IRS Notice 2026-60
• IRS Revenue Procedure 2019-48
• IRS Per Diem Frequently Asked Questions
• GSA Fiscal Year 2027 Per Diem Bulletin