The Internal Revenue Service will keep its high-low per diem rates steady for the new annual period beginning October 1, maintaining the amounts employers and employees use to reimburse business travel. The decision affects daily allowances for lodging, meals, and incidental expenses across designated high-cost and low-cost localities in the United States. The unchanged rates apply nationwide and guide companies crafting travel policies for the year ahead.
The announcement matters for employers who rely on standard daily allowances rather than collecting receipts for each expense. It also affects workers who travel often and expect consistent reimbursement rules. Keeping rates level signals stability amid shifting hotel and dining prices in many cities.
“In its list of high-cost and low-cost localities, the IRS kept per diem rates for travel, meals, and incidental expenses unchanged for the new annual period starting Oct. 1.”
What Per Diems Do and Who Uses Them
Per diems are daily allowances used to reimburse business travelers without requiring detailed receipts for every meal or taxi ride. Under the high-low method, the IRS designates certain cities as high-cost, with a higher daily rate, and all other areas as low-cost. Employers may use these rates to simplify recordkeeping under an accountable plan, reducing the risk of taxable income for employees.
Companies often select per diems to streamline audits and control budgets. For employees, per diems offer predictable reimbursements and reduce administrative tasks. The IRS also sets a meals-and-incidental-expenses portion, which is important for partial-day travel and first-or-last-day rules.
Why Keeping Rates Flat Matters
Holding rates steady means travel budgets built last year may still fit this year, which helps with planning. It can also prevent midyear policy changes and payroll adjustments. For small and midsize employers, stability reduces compliance burdens and avoids frequent updates to expense software and employee manuals.
However, flat rates can create pressure in markets where hotel and food prices have climbed faster than average. Travelers in those cities may face tighter budgets, and companies may need to approve exceptions in specific cases. Travel managers say the lack of change may lead to more variance between actual costs and allowances in certain hot spots.
How the High-Low Method Works
Each year, the IRS publishes a list of high-cost localities along with effective dates for seasonal rates in resort areas. Employers using the high-low method must apply the correct rate based on the traveler’s destination and travel days. The method also includes special rules for first and last days, proration, and any travel that spans multiple localities.
When employers pay per diems under an accountable plan and maintain proper documentation of time, place, and business purpose, the amounts can be excluded from an employee’s wages up to the federal limits. Amounts above those limits may be taxable. Workers cannot deduct unreimbursed travel expenses on their individual returns, so employer policy choices are significant for take-home pay.
Industry Impact and Planning Considerations
Finance leaders and HR teams will likely keep existing policies in place, given the unchanged rates. For sectors with heavy travel—consulting, construction, field services, and sales—the decision reduces the need for policy revisions. It also supports consistent reporting for payroll, tax withholding, and year-end forms.
- Budget holders can maintain current per-trip cost estimates.
- Expense systems may need only minor updates for lists of high-cost cities.
- Project bids that include travel should remain stable.
Some organizations may still conduct a market check for cities with noticeable price swings. In those cases, employers sometimes adopt a hybrid approach: using IRS per diems in most markets while allowing capped exceptions in locations where rates lag local prices.
What to Watch Next
Travel costs vary widely by season and event schedules. Large conferences, sporting events, and peak tourism periods can push prices above standard allowances. Employers monitoring these spikes may set temporary caps or require booking earlier. They may also encourage the use of negotiated hotel rates or corporate travel platforms to contain costs.
Regulatory watchers will look for any midyear adjustments or future changes to the list of high-cost localities. If lodging or dining inflation accelerates in specific areas, updates to the list could follow in later guidance. Companies should also track state rules, since some states reference federal per diems while others set their own standards.
The main takeaway is predictability. With no change in the federal high-low per diem amounts for the period beginning October 1, employers gain a stable base for travel reimbursement. Workers can expect consistent allowances, though local price movements may still require case-by-case judgment. As budgets close and new projects launch, the steady rates provide a clear starting point for policy and planning.
