Business travel per diem rates changed October 1, 2026, and employers that reimburse employees for business travel should take note.

The IRS recently released Notice 2026-60, establishing updated special per diem rates for the period beginning October 1, 2026. These rates can be used under applicable IRS rules to substantiate certain ordinary and necessary business travel expenses instead of reimbursing employees based solely on their actual lodging, meal and incidental expenses.

For businesses with employees who travel, the annual update is a good reminder to review travel reimbursement policies, accounting procedures and recordkeeping.

Here’s what changed—and what didn’t.

What Are Business Travel Per Diem Rates?

A per diem is a daily allowance that may be used for certain expenses incurred while an employee is traveling away from home for business.

Rather than requiring reimbursement based entirely on each actual lodging, meal and incidental expense, qualifying employers may use IRS-approved per diem methods, subject to applicable rules and substantiation requirements. The Journal of Accountancy explains that under the per diem substantiation method, when an employer or other payer provides a per diem allowance instead of reimbursing actual lodging, meal and incidental expenses, the amount considered substantiated for a day is generally limited based on the applicable federal per diem rate and the allowance paid.

Per diem can simplify expense reimbursement, but it doesn’t mean businesses can simply pay any daily amount and automatically receive the intended tax treatment. Employers still need to follow applicable IRS rules.

New Business Travel Per Diem Rates for 2026–2027

One of the biggest changes involves the IRS high-low substantiation method.

Beginning October 1, 2026:

Travel location	Previous rate	New rate
High-cost CONUS locality	$319	$329
Other CONUS locality	$225	$230

That represents a $10 increase in the high-cost rate and a $5 increase in the rate for other qualifying continental U.S. locations. IRS

The high-low method is designed to simplify reimbursement by dividing qualifying travel locations within the continental United States into two categories rather than requiring employers to use an individual rate for every destination.

The IRS defines the high-cost localities for this purpose in its annual notice.

What About Meals and Incidental Expenses?

Not every component increased.

For purposes of the high-low method, the portion treated as meals remains:

• $86 for travel to a high-cost locality.
• $74 for travel to another CONUS locality.

The IRS also kept the special meals and incidental expenses, or M&IE, rates for taxpayers in the transportation industry at $80 per day for CONUS travel and $86 per day for travel outside CONUS.

The separate rate for an incidental-expenses-only deduction also remains unchanged at $5 per day.

That distinction matters. Businesses shouldn’t assume that every component of the per diem rules increased simply because the overall high-low rates changed.

The List of High-Cost Locations Changed Too

The dollar amounts aren’t the only update.

The IRS also revised the list of destinations considered high-cost localities.

For 2026–2027, the IRS added:

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

Panama City, Florida, was removed from the high-cost list. The IRS also changed the portion of the year during which several other destinations qualify as high-cost localities.

That’s important because a destination’s treatment isn’t necessarily based only on where an employee travels. For some destinations, it also depends on when the travel occurs.

Businesses using the high-low method should therefore verify the applicable location and travel period rather than assuming last year’s classification still applies.

When Do the New Business Travel Per Diem Rates Take Effect?

The new business travel per diem rates are effective for qualifying allowances paid to an employee on or after October 1, 2026, for travel away from home on or after October 1, 2026.

The notice also applies for purposes of computing allowable deductions for applicable meal and incidental expenses paid or incurred beginning October 1.

The IRS provides transition rules for the final three months of the calendar year, so businesses already using a per diem method should make sure they understand which rates and procedures apply during that transition period.

Per Diem Doesn’t Eliminate the Need for Good Records

This may be the most important takeaway for business owners.

Using a per diem method can simplify substantiation of certain travel costs, but good business records still matter.

Businesses should maintain documentation supporting the business purpose of travel and information necessary under the applicable reimbursement and substantiation rules.

That may include records showing:

Who traveled

Where the employee traveled

Dates of travel

Business purpose

Applicable reimbursement method

Amounts reimbursed

Supporting expense documentation when required

Business Travel Expenses Should Be Part of Your Bookkeeping Process

Travel reimbursements shouldn’t exist separately from the rest of your accounting system.

When employees travel regularly, businesses should have a consistent process for recording travel expenses, reimbursements and supporting documentation.

This is particularly important when a business uses multiple methods—for example, reimbursing some actual expenses while using allowable per diem rates for others.

Consistent bookkeeping can help business owners understand where money is going, correctly categorize expenses and provide their tax professional with better records at tax time.

What Should Employers Do Now?

With the new business travel per diem rates effective October 1, this is a good time for employers to review their current travel procedures.

Check whether your company:

1. Uses the IRS high-low method or another reimbursement method.
2. Has updated the applicable rates beginning October 1.
3. Has employees traveling to destinations whose high-cost status changed.
4. Maintains adequate documentation of business travel.
5. Records reimbursements consistently in the accounting system.
6. Has a written travel and expense reimbursement policy.

The goal isn’t simply to update a number in payroll or accounting software. It’s to make sure the reimbursement process remains consistent with the method the business actually uses.

Business Travel Per Diem Rates: The Bottom Line

The IRS’s updated business travel per diem rates provide businesses with new figures beginning October 1, 2026.

Under the high-low method, the rate for designated high-cost locations increases to $329 per day, while the rate for other CONUS locations increases to $230 per day. The applicable meal components remain $86 and $74, and the transportation-industry M&IE and incidental-only rates remain unchanged.

For business owners, this update is also a useful reminder that travel reimbursement is part of the larger accounting picture.

Accurate reimbursements, consistent bookkeeping and organized records can make it easier to track expenses throughout the year and properly prepare business tax returns.

At Cheshier Tax Resolution / C&A Associates, we work with business owners to keep their bookkeeping, accounting records and tax information organized throughout the year—not just when a filing deadline arrives.

If your business has employees who travel, October 1 is a good time to review your travel reimbursement process.

FAQ: Business Travel Per Diem Rates

What are the new business travel per diem rates for 2026?

Beginning October 1, 2026, the IRS high-low rate is $329 for designated high-cost localities and $230 for other CONUS localities.

Did the meal portion of the high-low rates increase?

No. The amount treated as paid for meals remains $86 for high-cost locations and $74 for other CONUS locations.

When do the new IRS per diem rates take effect?

The new rates generally apply to qualifying allowances paid on or after October 1, 2026, for travel away from home on or after October 1, 2026.

Are all cities subject to the same per diem rate?

No. The high-low method distinguishes between designated high-cost localities and other CONUS locations. Some locations qualify as high-cost only during specified portions of the year.

Does using per diem mean businesses don’t need travel records?

No. Per diem methods can simplify substantiation of certain expense amounts, but businesses still need to comply with the applicable IRS rules and maintain records supporting business travel.

Did the transportation-industry per diem rate change?

The special M&IE rates remain $80 for CONUS travel and $86 for travel outside CONUS. The incidental-expenses-only rate also remains $5 per day.

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