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IRS Publishes Special Per Diem Rates for 2020-2021

SEP. 11, 2020

Notice 2020-71; 2020-40 IRB 1

DATED SEP. 11, 2020
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Citations: Notice 2020-71; 2020-40 IRB 1

Modified and Superseded by Notice 2021-52

Supersedes Notice 2019-55

2020-2021 Special Per Diem Rates

SECTION 1. PURPOSE

This annual notice provides the 2020-2021 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.

SECTION 2. BACKGROUND

Rev. Proc. 2019-48, 2019-51 I.R.B. 1392 (or successor), provides rules for using a per diem rate to substantiate, under § 274(d) of the Internal Revenue Code and § 1.274-5 of the Income Tax Regulations, the amount of ordinary and necessary business expenses paid or incurred while traveling away from home. Taxpayers using the rates and list of high-cost localities provided in this notice must comply with Rev. Proc. 2019-48 (or successor). Notice 2019-55, 2019-42 I.R.B. 937, provides the rates and list of high-cost localities for the period October 1, 2019, to September 30, 2020.

SECTION 3. SPECIAL M&IE RATES FOR TRANSPORTATION INDUSTRY

The special M&IE rates for taxpayers in the transportation industry are $66 for any locality of travel in the continental United States (CONUS) and $71 for any locality of travel outside the continental United States (OCONUS). See section 4.04 of Rev. Proc. 2019-48 (or successor).

SECTION 4. 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. 2019-48 (or successor).

SECTION 5. 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 2019-55 (the per diem substantiation method) are $292 for travel to any high-cost locality and $198 for travel to any other locality within CONUS. The amount of the $292 high rate and $198 low rate that is treated as paid for meals for purposes of § 274(n) is $71 for travel to any high-cost locality and $60 for travel to any other locality within CONUS. See section 5.02 of Rev. Proc. 2019-48 (or successor). The per diem rates in lieu of the rates described in Notice 2019-55 (the meal and incidental expenses only substantiation method) are $71 for travel to any high-cost locality and $60 for travel to any other locality within CONUS.

2. High-cost localities. The following localities have a federal per diem rate of $245 or more, and are high-cost localities for the specified portion of the calendar year.

Key City

County or Other Defined Location

Portion of Calendar Year

Arizona

Sedona

City Limits of Sedona

October 1 - December 1, March 1 - April 30, and September 1 - September 30

California

Los Angeles

Los Angeles, Orange, Ventura, Edwards AFB less the city of Santa Monica

October 1 - October 31 and January 1 - September 30

Mill Valley/San Rafael/Novato

Marin

October 1 - October 31 and June 1 - September 30

Monterey

Monterey

June 1 - August 31

Napa

Napa

October 1 - November 30 and April 1 - September 30

Oakland

Alameda

October 1 - September 30

San Diego

San Diego

February 1 - July 31

San Francisco

San Francisco

October 1 - September 30

San Mateo/Foster City/Belmont

San Mateo

October 1 - September 30

Santa Barbara

Santa Barbara

October 1 - September 30

Santa Monica

City limits of Santa Monica

October 1 - September 30

Sunnyvale/Palo Alto/San Jose

Santa Clara

October 1 - September 30

Colorado

Aspen

Pitkin

October 1 - March 31 and June 1 - September 30

Crested Butte/Gunnison

Gunnison

December 1 - March 31

Denver/Aurora

Denver, Adams, Arapahoe, and Jefferson

October 1 - October 31 and April 1 - September 30

Grand Lake

Grand

December 1 - March 31

Silverthorne/Breckenridge

Summit

December 1 - March 31

Telluride

San Miguel

October 1 - September 30

Vail

Eagle

October 1 - September 30

Delaware

Lewes

Sussex

July 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)

October 1 - September 30

Florida

Boca Raton/Delray Beach/Jupiter

Palm Beach and Hendry

December 1 - April 30

Fort Lauderdale

Broward

January 1 - April 30

Fort Meyers

Lee

February 1 - March 31

Fort Walton Beach/De Funiak Springs

Okaloosa and Walton

June 1 - July 31

Gulf Breeze

Santa Rosa

June 1 - July 31

Key West

Monroe

October 1 - July 31

Miami

Miami-Dade

December 1 - March 31

Naples

Collier

December 1 - April 30

Vero Beach

Indian River

December 1 - April 30

Georgia

Jekyll Island/ Brunswick

Glynn

March 1 - July 31

Illinois

Chicago

Cook and Lake

October 1 - November 30 and April 1 - September 30

Maine

Bar Harbor/Rockport

Hancock and Knox

July 1 - August 31

Kennebunk/Kittery/ Sanford

York

July 1 - August 31

Maryland

Ocean City

Worcester

July 1 - August 31

Washington, DC Metro Area

Montgomery and Prince George's

October 1 - September 30

Massachusetts

Boston/Cambridge

Suffolk, City of Cambridge

October 1 - September 30

Falmouth

City limits of Falmouth

July 1 - August 31

Hyannis

Barnstable less the city of Falmouth

July 1 - August 31

Martha's Vineyard

Dukes

June 1 - September 30

Nantucket

Nantucket

June 1 - September 30

Michigan

Petoskey

Emmet

July 1 - August 31

Traverse City

Grand Traverse

July 1 - August 31

Montana

Big Sky/West Yellowstone/Gardiner

Gallatin and Park

June 1 - September 30

New Mexico

Carlsbad

Eddy

October 1 - September 30

New York

Lake Placid

Essex

July 1 - August 31

New York City

Bronx, Kings, New York, Queens, and Richmond

October 1 - December 31 and March 1 - September 30

Oregon

Portland

Multnomah

October 1 - October 31 and June 1 - September 30

Seaside

Clatsop

July 1 - August 31

Pennsylvania

Hershey

Hershey

June 1 - August 31

Philadelphia

Philadelphia

October 1 - November 30, March 1 - June 30, and September 1 - September 30

Rhode Island

Jamestown/ Middletown/Newport

Newport

October 1 - October 31 and June 1 - September 30

South Carolina

Charleston

Charleston, Berkeley, and Dorchester

October 1 - November 30 and March 1 - September 30

Tennessee

Nashville

Davidson

October 1 - September 30

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

October 1 - September 30

Washington

Seattle

King

October 1 - September 30

Vancouver

Clark, Cowlitz, and Skamania

October 1 - October 31 and June 1 - September 30

Wyoming

Cody

Park

June 1 - September 30

Jackson/Pinedale

Teton and Sublette

June 1 - September 30

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 2019-55.

a. The following localities have been added to the list of high-cost localities: Los Angeles, California; San Diego, California; Gulf Breeze, Florida; Kennebunk/Kittery/Sanford, Maine; Virginia Beach, Virginia.

b. The following localities have changed the portion of the year in which they are high-cost localities: Sedona, Arizona; Monterey, California; Santa Barbara, California; District of Columbia (see also Maryland and Virginia); Naples, Florida; Jekyll Island/Brunswick, Georgia; Boston/Cambridge, Massachusetts; Philadelphia, Pennsylvania; Jamestown/Middletown/Newport, Rhode Island; Charleston, South Carolina.

c. The following localities have been removed from the list of high-cost localities: Midland/Odessa, Texas; Pecos, 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, 2020, for travel away from home on or after October 1, 2020. 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, 2020. See sections 4.06 and 5.04 of Rev. Proc. 2019-48 (or successor) for transition rules for the last 3 months of calendar year 2020.

SECTION 7. EFFECT ON OTHER DOCUMENTS

Notice 2019-55 is superseded.

DRAFTING INFORMATION

The principal author of this notice is James Liechty of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this notice contact James Liechty at (202) 317-7005 (not a toll-free call).

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