September 27, 2023

IRS per diem rate for truckers staying flat in 2023-24


The key federal per diem rate for transportation companies will be unchanged in the federal fiscal year that begins Sunday.

However, the “high-low substantiation” per diem is rising, though truckers’ use of that deduction is thought to be relatively rare.

The IRS, in its statement announcing the 2023-24 rates, defined the per diem as the rate that would cover “the amount or ordinary and necessary business expenses incurred while traveling away from home.” The specifics are that it is made up of “the special transportation industry meal and incidental expenses,” which are known as the M&IE rates; the rate for “incidental expenses only,” which is just $5 per day; and rates for low-cost and high-cost areas using the “high-low substantiation method,” a tool that compensates for lodging.

The M&IE rate will stay at $69 per day for travel within the continental U.S. and $74 for any travel outside of the lower 48. This will be the third year in a row that rate is in effect. 

While companies can offer higher per diems, the general consensus in the industry is that the deductible IRS rate is the one used to compensate drivers.

If a driver does not take reimbursement for meals, a $5 per day per diem rate is in effect. That is unchanged.

The rate that has gone up is the high-low substantiation, which takes into effect lodging. A trucker utilizing a sleeper berth would not be utilizing that deduction because there are no lodging expenses incurred. That figure rose to $214 from $204 for non-high-cost areas and to $309 from $297 for high-cost areas. 

The list of high-cost areas is a long one. Few of them are year-round but might be for a two- or three-month period; for example, Virginia Beach is a high-cost area between June 1 and Aug. 31. 

Several areas were added to the high-cost list this year: Yosemite National Park in California (all year); Tampa/St. Petersburg, Florida; Atlanta; Missoula, Montana; Saratoga Springs/Schenectady, New York; Eugene/Florence, Oregon; and Montpelier, Vermont. Outside of Yosemite, all the other areas have limited periods with the high-cost designation.

In a presentation made to the National Accounting & Finance Council of the American Trucking Associations several years ago, Troy Hogan, a director at advisory firm Katz, Sapper & Miller, spelled out how a per diem could be used to boost driver compensation. 

Hogan’s presentation ran side-by-side comparisons of a driver paid 52 cents per mile with no per diem and a driver paid 41 cents per mile with a per diem that worked out to 10 cents per mile. In the comparison, both drove 2,475 miles during the week.

While the gross pay of the “no per diem” driver was higher, different tax considerations of the per diem resulted in a net pay of $1,032 for the driver paid a per diem and net pay of $995 for a driver who received the higher base pay but with no per diem.

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