n-17-54.pdf

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2017-2018 Special Per Diem Rates

Notice 2017-54

SECTION 1. PURPOSE
This annual notice provides the 2017-2018 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. 2011-47, 2011-42 I.R.B. 520, 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. 2011-47. Notice
2016-58, 2016-41 I.R.B. 438, provides the rates and list of high-cost localities for the
period October 1, 2016, to September 30, 2017.

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Section 3.02(3) of Rev. Proc. 2011-47 provides that the term “incidental
expenses” has the same meaning as in the Federal Travel Regulations, 41 C.F.R. 300-
3.1, and that future changes to the definition of incidental expenses in the Federal
Travel Regulations would be announced in the annual per diem notice. Subsequent to
the publication of Rev. Proc. 2011-47, the General Services Administration published
final regulations revising the definition of incidental expenses under the Federal Travel
Regulations to include only fees and tips given to porters, baggage carriers, hotel staff,
and staff on ships. Transportation between places of lodging or business and places
where meals are taken, and the mailing cost of filing travel vouchers and paying
employer-sponsored charge card billings, are no longer included in incidental expenses.
Accordingly, taxpayers using the per diem rates may separately deduct or be
reimbursed for transportation and mailing expenses.
SECTION 3. SPECIAL M&IE RATES FOR TRANSPORTATION INDUSTRY
The special M&IE rates for taxpayers in the transportation industry are $63 for
any locality of travel in the continental United States (CONUS) and $68 for any locality
of travel outside the continental United States (OCONUS). See section 4.04 of Rev.
Proc. 2011-47.
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. 2011-47.
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 2016-58 (the per diem

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substantiation method) are $284 for travel to any high-cost locality and $191 for travel to
any other locality within CONUS. The amount of the $284 high rate and $191 low rate
that is treated as paid for meals for purposes of § 274(n) is $68 for travel to any high-
cost locality and $57 for travel to any other locality within CONUS. See section 5.02 of
Rev. Proc. 2011-47. The per diem rates in lieu of the rates described in Notice 2016-58
(the meal and incidental expenses only substantiation method) are $68 for travel to any
high-cost locality and $57 for travel to any other locality within CONUS.
2. High-cost localities. The following localities have a federal per diem rate of $238
or more, and are high-cost localities for all of the calendar year or the portion of the
calendar year specified in parentheses under the key city name.
Key city County or other defined location

California
Mill Valley/San Rafael/Novato Marin
(October 1-October 31 and June 1-September 30)
Monterey Monterey
(July 1-August 31)
Napa Napa
(October 1-October 31 and May 1-September 30)
Oakland Alameda
(October 1-October 31 and January 1-September 30)
San Francisco San Francisco
San Mateo/Foster City/Belmont San Mateo
Santa Barbara Santa Barbara
Santa Monica City limits of Santa Monica
Sunnyvale/Palo Alto/San Jose Santa Clara

Colorado
Aspen Pitkin
Denver/Aurora Denver, Adams, Arapahoe,
and Jefferson
Grand Lake Grand
(December 1-March 31)
Silverthorne/Breckenridge Summit
(December 1-March 31)
Steamboat Springs Routt

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(December 1-March 31)
Telluride San Miguel
Vail Eagle
(December 1-March 31 and
July 1-August 31)

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)

Florida
Boca Raton/Delray Beach/Jupiter Palm Beach and Hendry
(January 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)
Key West Monroe
Miami Miami-Dade
(December 1-March 31)
Naples Collier
(December 1-April 30)

Illinois
Chicago Cook and Lake
(October 1-November 30 and
April 1-September 30)

Maine
Bar Harbor Hancock
(October 1-October 31 and July 1-September 30)

Maryland
Ocean City Worcester
(July 1-August 31)
Washington, DC Metro Area Montgomery and Prince George’s

Massachusetts
Boston/Cambridge Suffolk, city of Cambridge

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Falmouth City limits of Falmouth
(July 1-August 31)
Hyannis Barnstable less the city of
(July 1-August 31) Falmouth
Martha's Vineyard Dukes
(June 1-September 30)
Nantucket Nantucket
(June 1-September 30)

Michigan
Petoskey Emmet
(July 1-August 31)
Traverse City/Leland Grand Traverse and Leelanau
(July 1-August 31)

New York
Lake Placid Essex
(July 1-August 31)
New York City Bronx, Kings, New York, Queens,
and Richmond
Saratoga Springs/Schenectady Saratoga and Schenectady
(July 1-August 31)

Oregon
Portland Multnomah
(October 1-October 31 and March 1-September 30)
Seaside Clatsop
(July 1-August 31)

Pennsylvania
Hershey Hershey
(June 1-August 31)
Philadelphia Philadelphia
(October 1-November 30 and
April 1-September 30)

Rhode Island
Jamestown/Middletown/Newport Newport
(October 1-October 31 and
June 1-September 30)

South Carolina
Charleston Charleston, Berkeley and
(October 1-November 30 and Dorchester
March 1-September 30)

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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

Washington
Seattle King
Vancouver Clark, Cowlitz, and Skamania
(October 1-October 31 and March 1-September 30)
Wyoming
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 2016-58.
a. The following localities have been added to the list of high-cost localities:
Oakland, California; Lewes, Delaware; Fort Myers, Florida; Hyannis,
Massachusetts; Petoskey, Michigan; Portland, Oregon; Vancouver, Washington.
b. The following localities have changed the portion of the year in which they are
high-cost localities: Aspen, Colorado; Denver/Aurora, Colorado; Telluride,
Colorado; Vail, Colorado; Bar Harbor, Maine; Ocean City, Maryland; Nantucket,
Massachusetts; Philadelphia, Pennsylvania; Jamestown/Middletown/Newport,
Rhode Island; Jackson/Pinedale, Wyoming.
c. The following localities have been removed from the list of high-cost localities:
Sedona, Arizona; Los Angeles, California; Vero Beach, Florida; Kill Devil, North
Carolina.

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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, 2017, for travel away from home on or after October 1, 2017. 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, 2017. See sections 4.06 and 5.04 of Rev. Proc.
2011-47 for transition rules for the last 3 months of calendar year 2017.
SECTION 7. EFFECT ON OTHER DOCUMENTS
Notice 2016-58 is superseded.
DRAFTING INFORMATION
The principal author of this notice is Elizabeth Binder of the Office of Associate
Chief Counsel (Income Tax & Accounting). For further information regarding this notice
contact Ms. Binder at (202) 317-7005 (not a toll-free call).