The IRS updates its travel expense reimbursement schedule every year, and the latest updates were released Sept. 16. The updates cover employee travel expenses incurred on or after Oct. 1, 2015, and remain in effect until the following Oct. 1. The IRS notice outlined rates for transportation industry employees, incidental-only expenses, and revised figures for those using the high/low reimbursement method.
High/Low Substantiation Method
Those who use the high/low substantiation method for their travel expense reimbursements will note an increase in the per diem rate for high-cost and other destinations throughout the US. The updated per diem rate for high-cost localities is $275, up from the last year’s $259. The updated per diem rate for travel to other localities is $185, up from last year’s $172.
A portion of the per diem rate covers meals, which is set at $68 for high-cost destinations and $57 for other destinations. Per diem allowances can either cover lodging, meals and incidental expenses, or meal and incidental expenses only.
A comprehensive look at the special per diem rates is available on the IRS website, along with a list of high-cost localities that were added and those that are only considered high-cost during certain times of the year. Be sure your travel expense reporting software is updated with these latest rates.
Incidental Expenses
Incidental expenses remain unchanged at $5 per day, and they refer to the cost of fees and tips given to hotel and cruise ship staff, baggage carriers and porters during travel in and outside the US. The incidental expense category was more inclusive prior to 2012, but was revised to cover fees and tips only.
Expenses that had previously been part of the category included mailing costs for filing travel vouchers and sending employer charge card payments as well as travel from your place of business or lodging to meals when out of town. These expenses may now be deducted separately for reimbursement.
Transportation Industry Employees
Those in the transportation industry have two different rates for special meals and incidental expenses. The amount is $63 for travel destinations within the US and $68 for destinations outside of the continental US.
It’s easy to track and manage employee travel and expense costs with Chrome River’s expense management software.
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Our choice of Chrome River EXPENSE was made in part due to the very user-friendly interface, easy configurability, and the clear commitment to impactful customer service – all aspects in which Chrome River was the clear winner. While Chrome River is not as large as some of the other vendors we considered, we found that to be a benefit and our due diligence showed that it could support us as well as any large players in the space, along with a personalized level of customer care.
We are excited to be able to enforce much more stringent compliance to our expense guidelines and significantly enhance our expense reporting and analytics. By automating these processes, we will be able to free up AP time formerly spent on manual administrative tasks, and enhance the role by being much more strategic.