The IRS Just Updated Business Travel Per Diem Rates: What Small Businesses Need to Know for 2026–27 (Oct. 23, 2026)

If your business sends you, or your employees, out of town, the IRS has new per diem figures to put on your radar. Notice 2026-60, published in Internal Revenue Bulletin 2026-43 on October 19, 2026, sets special federal rates for the period beginning October 1, 2026.

The practical takeaway: the numbers can simplify how qualifying business-travel expenses are substantiated. They do not mean you automatically receive that amount, can deduct it for any trip, or should use it to plan your travel spending. The IRS is many things; a hotel-price forecast is not one of them.

First, what does “per diem” actually mean?

A per diem is a substantiation method: when the rules allow it, a set daily rate can be used instead of documenting every eligible expense dollar by dollar. The trip still needs to meet the underlying requirements.

In general, business travel must have a business purpose and take you away from your tax home long enough that you need sleep or rest. Your tax home usually means your main place of business, not necessarily where you live. A quick local drive for a meeting is not automatically “travel away from home,” even if the traffic feels like a long-distance expedition.

Your employer’s reimbursement policy, accountable-plan procedures, records, and the particular method you use all matter. Self-employed taxpayers should take extra care: don’t assume an employee reimbursement method applies to your own deduction in the same way. Check your circumstances with a qualified tax professional.

For a plain-English overview, see IRS Topic 511: Business travel expenses and IRS Publication 463, Travel, Gift, and Car Expenses.

The new rates, without turning this into a spreadsheet marathon

For the high-low method, Notice 2026-60 sets these CONUS rates:

• $329 per day for travel to a high-cost locality.

• $230 per day for travel to any other CONUS locality.

• For the meal portion used in the business-meal limitation calculation, $86 of the high rate and $74 of the low rate.

• If using the separate M&IE-only high-low method: $86 for a high-cost locality and $74 for other localities.

M&IE means meals and incidental expenses. The meal portion is relevant because business meals are generally subject to a 50% deduction limit, though exceptions may apply.

There are also two rates for specific situations:

• Transportation-industry M&IE: $80 per day CONUS and $86 per day OCONUS for eligible transportation-industry taxpayers.

• Incidental expenses only: $5 per day, CONUS or OCONUS.

These are not interchangeable options to pick just because one sounds convenient. The transportation rate is for qualifying transportation-industry work, and the incidental-only method has its own limits. It is not a substitute for meals or lodging.

Locality and travel dates can change the rate

“High-cost” isn’t a permanent label for a city. Under Notice 2026-60, some places qualify only during specified parts of the calendar year. The notice’s locality list and dates matter.

For example:

• Boca Raton/Delray Beach/Jupiter is high-cost from January 1 through April 30.

• Miami is high-cost from December 1 through May 31.

• Key West is high-cost year-round, October 1 through September 30.

So, if a qualifying trip uses the high-low method, travel to Miami in February and travel there in July may fall under different high-low categories. For the precise locality, county or defined area, and applicable dates, check the full IRS Notice 2026-60. Don’t rely on a familiar city name alone; the IRS list can define geographic boundaries more specifically.

When do the updated rates start?

The notice applies to qualifying per diem allowances paid to employees on or after October 1, 2026, for travel on or after October 1, 2026. For deduction purposes, the notice applies to M&IE or incidental expenses paid or incurred on or after that date.

There may be transition rules for the final three months of calendar year 2026. If your business has already been using a particular method or rate set this year, don’t switch methods on the fly without checking the rules in Publication 463 and the applicable guidance. For employers using the high-low method, consistency matters, including how the method is applied to employees.

Lodging and meals don’t always follow the same rules

Here’s an easy detail to miss: lodging and M&IE are not the same expense bucket. The high-low daily rate is a combined rate for qualifying lodging, meals, and incidentals under that substantiation method; the stated meal portion is separately identified for meal-limit purposes.

The M&IE-only method, by contrast, covers meals and incidentals, not lodging. Lodging may be paid directly, provided, or handled using actual lodging costs, depending on the method and arrangement. The amount of a per diem is not a quote for your hotel, and the IRS rate does not guarantee that it will cover what a hotel actually charges.

For self-employed readers in particular, be cautious about treating a high-low allowance as a simple all-in deduction. Eligibility and substantiation depend on your situation and the method’s requirements. Review Publication 463 or ask a tax professional to evaluate the right treatment for your business.

A per diem is not a tax-free cash perk, or an automatic write-off

This is the important part, so let’s say it plainly. A federal per diem rate does not automatically make a cash payment tax-free. It also doesn’t create a deduction for a personal trip, travel that isn’t away from your tax home, or an expense without a valid business purpose.

For employee reimbursements, accountable-plan handling generally includes a business connection, timely and adequate accounting, and returning excess amounts within a reasonable period. If those rules aren’t met, the tax treatment may change. And while a qualifying per diem can simplify substantiating the amount, you generally still need records showing the time, place, and business purpose of the travel.

Self-employed readers should not assume they can use every employer reimbursement procedure or that a daily rate resolves every deduction question. Your travel facts, tax home, lodging costs, and reporting method all deserve a careful review.

A practical checklist for your next business trip

Before you file that receipt under “I’ll remember what this was,” capture the details while they’re fresh:

• Receipts and records: Save lodging receipts and records for airfare, ground transportation, parking, tolls, and other expenses as applicable.

• Travel dates: Record departure and return dates, plus any partial travel days.

• Business purpose: Note the meeting, client visit, event, or work assignment and the business reason for the trip.

• Location: Record the destination and check whether it appears on the high-cost locality list for those dates.

• Reimbursement method: Note whether the employer reimbursed actual costs, used a per diem, or paid expenses directly.

• Timely expense reporting: Follow your employer’s deadlines and keep a copy of what you submit. Self-employed? Keep your own organized records.

Good documentation is not glamorous. Neither is hunting through a suitcase for a faded hotel folio in April. One of those tasks is easier to avoid.

Keep business travel separate from the dream-home fund

If you’re saving toward a dream home, clean bookkeeping helps keep business expenses and personal home-buying funds in their proper lanes. A business trip does not become deductible because you viewed a neighborhood or toured a potential home while you were there. Keep any personal home search separate from the work purpose and related expenses.

For other practical paperwork and preparation support, visit the Make-A-Move Enterprise website or browse the Make-A-Move Enterprise blog.

Sources and scope

The rates and examples above are based on IRS Notice 2026-60, published in Internal Revenue Bulletin 2026-43, and IRS guidance in Topic 511 and Publication 463. Rules can depend on your particular facts, chosen method, and current guidance. This article is general information, not tax advice. Consider a tax-specific review before applying a rate to your return or reimbursement policy.

Important service disclaimer: Make-A-Move Enterprise, LLC is not a law firm and does not provide legal advice. Its team consists of non-lawyers who provide reliable clerical, research, and administrative procedures to support legal work, including paralegal outsourcing for firms as needed. Any tax-preparation support is administrative and professional preparation assistance, not tax advice.

How does your business currently track travel expenses, and which part of the process is the biggest paperwork headache?

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