See how much IRS per diem rates in 2019 let companies deduct in business travel to ten US cities through September 30, 2019. In this article, we’ll take a look at the US federal government’s per diem travel rates in effect for fiscal year 2019 (we did this in 2018 too).
Read on to get the rates to inform your business expense policy and compare them against real-world benchmarks.
Related: Click here to generate a business expense policy - for free.
What are IRS per diem rates?
IRS per diem rates represent what the US government predicts will be the average cost of lodging and eating in a given locality. Every year, the federal government’s General Services Administration (GSA) publishes a detailed table of per diem rates.
These rates specify how much federal employees are allowed to spend in two categories of travel expenses: lodging, and meals and incidental expenses (known as M&IE, which covers only meals and server tips and fees). The dollar amounts for these per diem rates are calculated for individual areas based on actual local costs.
Hundreds of cities in the US have unique GSA rates.The IRS allows private companies to use the GSA’s per diem rates as a “safe harbor” rate for deductions in those two categories of travel expense.
Taking advantage of these rates minimizes the recordkeeping burden on both the government and the taxpayer. As long as businesses don’t deduct more than these amounts, these expenses will not be considered part of employees’ taxable wages.
More businesses are reimbursing travel expenses in 2019
Since the last set of per diem rates were released in 2018, the Tax Cuts and Jobs Act came into effect. The new law changed vast areas of the deductible expense regime, such as eliminating the deductibility of entertainment expenses.
In IRS per diem rates in 2019, travel expenses are still deductible — up to 50% for meals — but only for employers. The law eliminated the ability for employees to deduct unreimbursed business expenses. In the past, employees could pay out of pocket for business expenses and instead of collecting reimbursement from their employers, deduct the amounts from their taxable wages (if the total spend was over 2% of their adjusted gross income.)
This year, that option is gone. Employees may no longer deduct this kind of expense.The upshot, presumably, is that any business that asks employees to spend money on business travel between now and 2026, when this provision of the law expires, will reimburse those out-of-pocket expenses.
Given the expected rise in the number of businesses reimbursing employee travel expenses, these IRS per diem rates become even more important than in years past. If employers deduct more travel expenses than these rates specify, the business needs to either report the expenses in detail under an accountable plan or stick employees with additional taxable wages.
Therefore, it’s fair to expect that the majority of businesses with travel expenses will be deducting (and possibly offering to reimburse employees) only up to these amounts.
IRS per diem rates in 2019: What they buy you in the 10 biggest US cities
For 2019, the default per diem rate in the continental US is $94 for lodging and $51 for M&IE. These rates are the standard deductions for travel to any area of the continental US not specified as having a special rate — mostly small towns and rural areas.
If your employees are traveling to a city, though, you’ll need to refer to the list of places identified as “non-standard areas.” The full list of those 300+ non-standard areas, along with their per diem rates, is available on the GSA website.
Below, we’ve compiled the rates for 10 of the biggest US cities for business travel, along with a few benchmark numbers that help indicate how far that money will go.
Important: Since the GSA calculates the cost of lodging by month in order to account for heavy travel seasons, the lodging rates shown below are the median of that city’s 2019 rates.City data provided by PriceOfTravel.com, Expatistan.com, and Numbeo.com.
New York City: $76 M&IE, $253 lodging
- Average business district lunch: $16
- Meal, inexpensive restaurant: $20
- Price range of 3-star hotels: $206 – $510
The nation’s largest city has seen its meal budget increase $2 from last year’s rates. And as the city Abacus HQ resides in, let us tell you: some of the best food here costs half that.
San Francisco: $76 M&IE, $270 lodging
- Average business district lunch: $16
- Meal, inexpensive restaurant: $16.50
- Price range of 3-star hotels: $180 – $350
This dense, expensive city has also seen a $2 meal increase from last year, which is an increase of about 2.7%, roughly in line with inflation. The median lodging rate has decreased by over 2%.
Washington, DC: $76 M&IE, $181 lodging
- Average business district lunch: $14
- Meal, inexpensive restaurant: $16
- Price range of 3-star hotels: $72 – $270
This area also comprises the Virginia cities of Alexandria, Falls Church, and Fairfax, and the counties of Arlington and Fairfax; and Montgomery and Prince George’s in Maryland. 10% increase from last year’s $69 and a 20% reduction in lodging prices.
Las Vegas: $61 M&IE, $130 lodging
- Average business district lunch: $13
- Meal, inexpensive restaurant: $15
- Price range of 3-star hotels: $57 – $182
One of the nation’s most popular convention hosts has also seen a big difference from last year: a rare 4.6% decrease in the meal rate and a 22% decrease in lodging.
Orlando: $66 M&IE, $122 lodging
- Average business district lunch: $16
- Meal, inexpensive restaurant: $15
- Price range of 3-star hotels: $50 – $98
Another popular destination for business travel, this city’s meal rate increased by 12% from last year, while lodging decreased 5.4%.
Chicago: $76 M&IE, $201 lodging
- Average business district lunch: $13
- Meal, inexpensive restaurant: $15
- Price range of 3-star hotels: $156 – $285
The Windy City’s meal per diem increased by 2.7%, while its lodging decrease was $3, good for a relatively minimal 1.5%.
Los Angeles: $66 M&IE, $180 lodging
- Average business district lunch: $15
- Meal, inexpensive restaurant: $15
- Price range of 3-star hotels: $80 – $275
The widely fluctuating prices of L.A. led to one of the rare increases on both rates: 3% on meals and 4% on lodging.
Boston: $71 M&IE, $273 lodging
- Average business district lunch: $15
- Meal, inexpensive restaurant: $15
- Price range of 3-star hotels: $132 – $210
This area — which includes Cambridge, MA — saw modest changes in the rates for both meals (+3%) and lodging (-2%).
Philadelphia: $61 M&IE, $180 lodging
- Average business district lunch: $14
- Meal, inexpensive restaurant: $15
- Price range of 3-star hotels: $109 – $259
Philly’s rate reflects costs in Center City, the main business district. The lodging per diem saw a huge increase of 21% over last year.
Dallas: $66 M&IE, $149 lodging
- Average business district lunch: $13
- Meal, inexpensive restaurant: $14
- Price range of 3-star hotels: $104 – $179
The most generous per diem on this list, Dallas’ rate is virtually unchanged from 2018.
Reimbursing travel expenses requires complete data
If you’re one of the many companies who is reimbursing more travel expenses in the wake of the tax law, why not make life easy on your employees? Abacus lets employees submit complete, accurate data at the moment of purchase.
The solution also organizes travel expenses into a convenient dashboard you can monitor in real time. Whatever deductions your company decides to take, real time expense reporting makes it easy to collect all the information you need from employees, freeing you to file with the IRS however makes sense for your business.
Learn more about how real time expense reporting can save you time and headache on travel expenses.