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If you or your team travel for business, changes to the IRS per diem rates could put more money back in your pocket and make tracking travel expenses easier. In this video, you’re going to learn what per diem is, why it matters, and exactly what the new IRS rate is for 2026 travel.
If you’re a small business owner who sends employees on the road, or you travel yourself for meetings, conferences, or client work, it’s crucial to understand how the IRS per diem rates work. The Internal Revenue Service updated per diem amounts in Notice 2025-54, with special rates that became effective October 1, 2025, and this impacts business travel into 2026.
Let’s break it down in a way that makes sense for your business.
First, what is per diem?
Per diem is a daily allowance that the IRS lets you use to account for travel expenses without having to track every single receipt. Instead of submitting detailed expense reports for meals, lodging, and incidental costs like tips or service fees, you can simply use the IRS per diem rate for your travel location and deduct that amount.
This can significantly reduce administrative work and help you stay compliant. Per diem is especially helpful when you or your employees are on the road frequently or stay in high-cost cities.
The IRS notice includes three types of per diem information:
1. The standard federal per diem rates
These are the daily amounts you can use in most locations for lodging, meals, and incidental expenses.
2. A special transportation industry rate
This applies to businesses like trucking and delivery services whose employees are on the road extensively. These rates recognize that transportation professionals have different travel patterns than typical overnight business travelers.
3. High-low substantiation rates
Some cities are more expensive than others. Rather than publishing a unique rate for every location, the IRS identifies high-cost localities and applies a higher per diem there, while using a lower rate in other areas.
In addition, the IRS publishes a rate just for incidental expenses if you prefer to use per diem only for those costs.
Now, you might be wondering why this matters.
As stated earlier, using per diem can simplify record-keeping and support deductions for your business travel. You do not have to save every single meal receipt, so long as you use the approved per diem amounts. That reduces paperwork and makes travel reimbursement easier for your team.
It’s also important to know that using per diem is not mandatory. If you prefer to track actual expenses with receipts, you can do that instead. But for many small business owners, the per diem method strikes the best balance between compliance and simplicity.
So what’s the new rate?
Effective October 1, 2025, through the end of 2026 travel, the IRS adopted per diem rates that mirror the General Services Administration’s updated federal per diem amounts. While these vary by locality, here are some examples:
- The general federal per diem rate for meals and incidental expenses in most U.S. locations is $83 per day.
- The lodging rate varies by city but increases in high-cost areas like New York, San Francisco, and Washington D.C.
- For the incidental-only rate, the IRS set the amount at $20 per day for meals and incidental expenses if you are only substantiating those costs.
Because the per diem can change depending on where you travel, always check the current IRS or GSA listings before you book travel.
Remember this. These updated rates give you a tax-compliant way to cover business travel without tracking every receipt. Use them to reduce paperwork, improve reimbursements, and help your employees feel supported when they are on the road.
Per diem isn’t just a number on a page. It’s a tool that can save you time, reduce hassle, and keep your travel reimbursements clean and audit-ready. Take a moment to update your travel expense policies with the 2026 per diem rates so you and your team are on the same page.
If you want help building or revising your travel expense policies or need a per diem checklist you can use with your team, reach out and I’ll be happy to help. Safe travels and smart planning in 2026.
