Publication 1542: Per Diem Rates; Introductory Material

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Table of Contents

What's New

High-low substantiation method. Beginning January 1, 2005, the per diem rate for travel to any high-cost locality under the high-low substantiation method increases from $199 to $204. The rate for travel to any other locality within the continental United States increases from $127 to $129. Some localities have been added to or removed from the list. In addition, the portion of the year for which some localities qualify has changed. See Table 2 for more information.

Maximum federal per diem rates. Beginning December 27, 2004, the maximum per diem rate changed for the following locations.

Aurora, CO.
Cocoa Beach, FL.
Dallas, TX.

Beginning January 10, 2005, the maximum per diem rate will change for Great Neck, NY. See Table 4 for the new rates.

Introduction

This publication is for employers who pay a per diem allowance to employees for business travel away from home within the continental United States (CONUS), on or after October 1, 2003, and before January 1, 2006. It gives the maximum per diem rate you can use without treating part of the per diem allowance as wages for tax purposes. For a detailed discussion on the tax treatment of a per diem allowance, see chapter 13 of Publication 535, Business Expenses, or Revenue Procedure 2005-10, 2005-03 I.R.B. You can find the revenue procedure in the weekly Internal Revenue Bulletin (IRB) on the Internet at www.irs.gov/irb.

Per diem rates on the Internet. You will find links to per diem rates at www.policyworks.gov/perdiem. Click on “2005 Domestic Per Diem Rates” for links to:

CONUS per diem rates,
Per diem rates for areas outside the continental United States (OCONUS), such as Alaska, Hawaii, Puerto Rico, and U.S. possessions, and
Foreign per diem rates.

Publication 1542 revisions. If you are unable to print a copy of the January 2005 revision from the Internet, see How To Get Tax Help at the end of this publication. Follow the instructions under Phone for “Ordering forms, instructions, and publications.”

During the year, as changes to the federal per diem rates (updates) are announced by the General Services Administration (GSA), we will incorporate the changes into Publication 1542. A “What's Hot” article on the IRS website will alert you to which locations have updated rates. You will find the new rates in Table 4 of the revised publication. To reach the “What's Hot” articles, go to www.irs.gov/formspubs; click on What's Hot in Tax Forms, Pubs, and Other Tax Products; then click on the link provided under Changes to Our Current Tax Products.

We will also incorporate mid-year changes to the high-low rates into Publication 1542. You will be alerted to these changes by a “What's Hot” article on the IRS website, and find the changes in Table 2 of the revised publication.

The annual changes, both federal per diem and high-low rates, will be incorporated into the publication as soon as possible after being announced by GSA and the IRS. The annual issue of the publication should be available each year in mid- to late-October.

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