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The IRS has provided the 2016-2017 special per diem rates for taxpayers to use in substantiating the amount of ordinary and necessary business expenses incurred while traveling away from home, specifically: (1) the special transportation industry meal and incidental expenses (M&IE) rates; (2) the rate for the incidental expenses only deduction; and (3) the rates and list of high-cost localities for purposes of the high-low substantiation method. The new rates are effective October 1, 2016.
PURPOSE
This annual notice provides the 2016-2017 special per diem rates for taxpayers to use in substantiating the amount of ordinary and necessary business expenses incurred while traveling away from home, specifically (1) the special transportation industry meal and incidental expenses (M&IE) rates, (2) the rate for the incidental expenses only deduction, and (3) the rates and list of high-cost localities for purposes of the high-low substantiation method.
SPECIAL M&IE RATES FOR TRANSPORTATION INDUSTRY
The special M&IE rates for taxpayers in the transportation industry are $63 for any locality of travel in the continental United States (CONUS) and $68 for any locality of travel outside the continental United States (OCONUS). See section 4.04 of Rev. Proc. 2011-47.
RATE FOR INCIDENTAL EXPENSES ONLY DEDUCTION
The rate for any CONUS or OCONUS locality of travel for the incidental expenses only deduction is $5 per day. See section 4.05 of Rev. Proc. 2011-47.
HIGH-LOW SUBSTANTIATION METHOD
1. Annual high-low rates. For purposes of the high-low substantiation method, the per diem rates in lieu of the rates described in Notice 2015-63 (the per diem substantiation method) are $282 for travel to any high-cost locality and $189 for travel to any other locality within CONUS. The amount of the $282 high rate and $189 low rate that is treated as paid for meals for purposes of §274(n) is $68 for travel to any high-cost locality and $57 for travel to any other locality within CONUS. The per diem rates in lieu of the rates described in Notice 2015-63 (the meal and incidental expenses only substantiation method) are $68 for travel to any high-cost locality and $57 for travel to any other locality within CONUS.
2. High-cost localities. The following localities have a federal per diem rate of $236 or more, and are high-cost localities for all of the calendar year or the portion of the calendar year specified in parentheses under the key city name.
| Key city |
County or other defined location |
|
|
| Arizona |
|
Sedona |
City Limits of Sedona |
|
|
(March 1-April 30) |
|
| California |
|
Los Angeles |
Los Angeles, Orange, Ventura, Edwards AFB less the city of Santa Monica |
|
|
(January 1-March 31) |
|
Mill Valley/San Rafael/Novato |
Marin |
|
|
(October 1-October 31 and June 1-September 30) |
|
Monterey |
Monterey |
|
|
(July 1-August 31) |
|
Napa |
Napa |
|
|
(October 1-October 31 and May 1-September 30) |
|
San Francisco |
San Francisco |
|
San Mateo/Foster City/Belmont |
San Mateo |
|
Santa Barbara |
Santa Barbara |
|
Santa Monica |
City limits of Santa Monica |
|
Sunnyvale/Palo Alto/San Jose |
Santa Clara |
|
| Colorado |
|
Aspen |
Pitkin |
|
|
(December 1-March 31 and June 1-August 31) |
|
Denver/Aurora |
|
|
|
(October 1-November 30 and February 1-September 30) |
Denver, Adams, Arapahoe, and Jefferson |
|
Grand Lake |
Grand |
|
|
(December 1-March 31) |
|
Silverthorne/Breckenridge |
Summit |
|
|
(December 1-March 31) |
|
Steamboat Springs |
Routt |
|
|
(December 1-March 31) |
|
Telluride |
San Miguel |
|
|
(December 1-March 31 and June 1-August 31) |
|
Vail |
Eagle |
|
|
(December 1-August 31) |
|
| District of Columbia |
|
Washington D.C. (also the cities of Alexandria, Falls Church, and Fairfax, and the counties of Arlington and Fairfax, in Virginia; and the counties of Montgomery and Prince George’s in Maryland) (See also Maryland and Virginia) |
|
| Florida |
|
Boca Raton/Delray Beach/Jupiter |
Palm Beach and Hendry |
|
|
(January 1-April 30) |
|
Fort Lauderdale |
Broward |
|
|
(January 1-April 30) |
|
Fort Walton Beach/De Funiak Springs |
Okaloosa and Walton |
|
|
(June 1-July 31) |
|
Key West |
Monroe |
|
Miami |
Miami-Dade |
|
|
(December 1-March 31) |
|
Naples |
Collier |
|
|
(December 1-April 30) |
|
Vero Beach |
Indian River |
|
|
(December 1-April 30) |
|
| Illinois |
|
Chicago |
Cook and Lake |
|
|
(October 1-November 30 and April 1-September 30) |
|
| Maine |
|
Bar Harbor |
Hancock |
|
|
(July 1-August 31) |
|
| Maryland |
|
Ocean City |
Worcester |
|
|
(June 1-August 31) |
|
Washington, DC Metro Area |
Montgomery and Prince George’s |
|
| Massachusetts |
|
Boston/Cambridge |
Suffolk, city of Cambridge |
|
Falmouth |
City limits of Falmouth |
|
|
(July 1-August 31) |
|
Martha’s Vineyard |
Dukes |
|
|
(June 1-September 30) |
|
Nantucket |
Nantucket |
|
|
(October 1-December 31 and |
|
|
June 1-September 30) |
|
| Michigan |
|
Traverse City/Leland |
Grand Traverse and Leelanau |
|
|
(July 1-August 31) |
|
| New York |
|
Lake Placid |
Essex |
|
|
(July 1-August 31) |
|
New York City |
Bronx, Kings, New York, Queens, and Richmond |
|
Saratoga Springs/Schenectady |
Saratoga and Schenectady |
|
|
(July 1-August 31) |
|
| North Carolina |
|
Kill Devil |
Dare |
|
|
(June 1-August 31) |
|
Oregon |
|
|
Seaside |
Clatsop |
|
|
(July 1-August 31) |
|
| Pennsylvania |
|
Hershey |
Hershey |
|
|
(June 1-August 31) |
|
Philadelphia |
Philadelphia |
|
|
(October 1-November 30, April 1-June 30, and September 1-September 30) |
|
| Rhode Island |
|
Jamestown/Middletown/Newport |
Newport |
|
|
(July 1-August 31) |
|
| South Carolina |
|
Charleston |
Charleston, Berkeley and |
|
|
(October 1-November 30 and March 1-September 30) |
Dorchester |
|
| Utah |
|
Park City |
Summit |
|
|
(December 1-March 31) |
|
| Virginia |
|
Virginia Beach |
City of Virginia Beach |
|
|
(June 1-August 31) |
|
Wallops Island |
Accomack |
|
|
(July 1-August 31) |
|
Washington, DC Metro Area |
Cities of Alexandria, Fairfax, and Falls Church; counties of Arlington and Fairfax |
|
| Washington |
|
|
Seattle |
King |
|
| Wyoming |
|
|
Jackson/Pinedale |
Teton and Sublette |
|
|
(July 1-August 31) |
3. Changes in high-cost localities. The list of high-cost localities in this notice differs from the list of high-cost localities in section 5 of Notice 2015-63.
| a. |
The following localities have been added to the list of high-cost localities: Sedona, AZ; Los Angeles, California; Mill Valley/San Rafael/Novato, California; Vero Beach, Florida; Kill Devil, North Carolina; Seaside, Oregon. |
| b. |
The following localities have changed the portion of the year in which they are high-cost localities: Denver/Aurora, Colorado; Vail, Colorado; Fort Lauderdale, Florida; Naples, Florida; Chicago, Illinois; Philadelphia, Pennsylvania; Jamestown/Middletown/Newport, Rhode Island; Jackson/Pinedale, Wyoming. |
| c. |
The following localities have been removed from the list of high-cost localities: Mammoth Lakes, California; Midland, Texas. |
SECTION 6. EFFECTIVE DATE
This notice is effective for per diem allowances for lodging, meal, and incidental expenses, or for meal and incidental expenses only, that are paid to any employee on or after October 1, 2016, for travel away from home on or after October 1, 2016. For purposes of computing the amount allowable as a deduction for travel away from home, this notice is effective for meal and incidental expenses or for incidental expenses only paid or incurred on or after October 1, 2016. |
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