The IRS has raised its top per diem under the high-low method to $329 a day for travel to high-cost localities, up from $319 a year earlier. The agency’s Notice 2026-60, posted September 24, 2026, sets the rate at $329 for high-cost localities and $230 for other places in the continental United States, for per diem allowances paid on or after October 1, 2026.
The notice replaces Notice 2025-54, which set $319 and $225 for the year that began October 1, 2025. That is an increase of $10 a day in high-cost localities and $5 a day everywhere else in the continental U.S.
The rates matter to people whose employers repay travel with a flat daily amount instead of receipts, and to the employers deciding how much to pay. A worker sent to a high-cost locality for three nights can now be paid up to $329 a day without itemizing lodging, meals and incidentals, and an employee who was reimbursed at $319 should check whether the payroll office has switched to the new figure for trips on or after October 1.
The next decision point is the last three months of 2026, when employers can choose between the old rates and the new ones for travel from October through December.
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How the $329 and $230 rates are built
Under the high-low method, each day’s travel allowance counts as substantiated up to the applicable rate, so the traveler does not have to document the actual cost of lodging, meals and incidental expenses. The IRS splits each rate into a meal portion. For high-cost localities that portion is $86 of the $329, and for other continental U.S. localities it is $74 of the $230, according to the notice. Subtracting the meal portion leaves $243 a day for lodging and incidentals in high-cost places and $156 elsewhere.
The notice also carries two smaller rates. Employers that reimburse only meals and incidental expenses can use the $86 or $74 figures. Transportation industry workers have their own meals-and-incidentals rate, $80 a day for travel in the continental U.S. and $86 outside it. A rate for incidental expenses alone is $5 a day.
Four places added to the high-cost list, one dropped
The notice adds Tucson, Arizona; San Mateo, Foster City and Belmont, California; Albuquerque, New Mexico; and Cody, Wyoming, to the list of high-cost localities. It removes Panama City, Florida. A trip to Tucson or Albuquerque that would have been paid at $225 under last year’s list now qualifies for $329 for the portion of the year the locality is listed.
That last condition is easy to miss. Each locality counts as high-cost only for the months shown in the notice’s table. The notice changes the active months for Napa, South Lake Tahoe and Yosemite National Park in California; Aspen, Steamboat Springs and Telluride in Colorado; Fort Myers, Florida; Falmouth, Massachusetts; Toms River, New Jersey; New York City; Philadelphia; Hilton Head, South Carolina; Manchester and Montpelier, Vermont; and Port Angeles and Port Townsend, Washington. It also corrects the high-cost period for Sun Valley and Ketchum, Idaho.
Who can use the method, and who cannot
The method belongs to the payer. Revenue Procedure 2019-48, which the notice tells taxpayers to follow, says that an employer, its agent or a third party that pays a per diem in place of reimbursing actual expenses may use the high-low substantiation method. Employees and self-employed people cannot use it for their own meals-and-incidentals deduction. The revenue procedure also excludes payers and employees who are related under the tax code’s ownership test, which it sets at 10 percent for that purpose.
An employer that uses the method for an employee has to use it for all of that employee’s continental U.S. travel for the calendar year. Time, place and business purpose of the trip still have to be documented even when the amounts are not.
The October-to-December choice
The new rates took effect October 1, which falls in the last three months of the calendar year. For that stretch, the revenue procedure requires a payer to keep the same method it used in the first nine months. It may use either the rates and high-cost localities from the first nine months or the updated ones, so long as it applies the choice consistently to every employee reimbursed under the high-low method. The notice itself points readers to sections 4.06 and 5.04 of the revenue procedure for the transition rules for the last three months of 2026.
Checking a travel reimbursement against Notice 2026-60
The IRS posts these notices on its drop listing, where Notice 2026-60 appears among the September 24 postings. The notice’s tables give the exact months each locality is treated as high-cost, and those months decide whether $329 or $230 applies to a given trip.
Anyone who is paid a flat daily allowance should compare three things: the destination and its listed months, the date the allowance is paid, and the rate the employer’s policy uses. The paid-on-or-after date in the notice is October 1, 2026.
For deduction purposes, the notice applies to meals-and-incidentals or incidental-only expenses paid or incurred on or after October 1, 2026. The Notice 2026-60 text remains the document an employer’s payroll office and a tax preparer will both be working from.
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This article was produced with AI assistance and reviewed by The Financial Wire’s editorial team.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
