n-18-77.pdf

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2018-2019 Special Per Diem Rates

Notice 2018-77

SECTION 1. PURPOSE
This annual notice provides the 2018-2019 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 (or successor), 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 (or successor). Notice 2017-54, 2017-42 I.R.B. 321, provides the rates
and list of high-cost localities for the period October 1, 2017, to September 30, 2018.

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Section 3.02(3) of Rev. Proc. 2011-47 (or successor) 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, if permitted, 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 $66 for
any locality of travel in the continental United States (CONUS) and $71 for any locality
of travel outside the continental United States (OCONUS). See section 4.04 of Rev.
Proc. 2011-47 (or successor).
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 (or
successor).
SECTION 5. HIGH-LOW SUBSTANTIATION METHOD

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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 2017-54 (the per diem
substantiation method) are $287 for travel to any high-cost locality and $195 for travel to
any other locality within CONUS. The amount of the $287 high rate and $195 low rate
that is treated as paid for meals for purposes of § 274(n) is $71 for travel to any high-
cost locality and $60 for travel to any other locality within CONUS. See section 5.02 of
Rev. Proc. 2011-47 (or successor). The per diem rates in lieu of the rates described in
Notice 2017-54 (the meal and incidental expenses only substantiation method) are $71
for travel to any high-cost locality and $60 for travel to any other locality within CONUS.
2. High-cost localities. The following localities have a federal per diem rate of $241
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

Arizona
Sedona City Limits of Sedona

California
Los Angeles Los Angeles, Orange, Ventura,
(October 1-October 31 and Edwards AFB less the city of
January 1-September 30) Santa Monica
Monterey Monterey
(July 1-August 31)
Napa Napa
(October 1-October 31 and
May 1-September 30)
Oakland Alameda
San Diego San Diego
(January 1-July 31)
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

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Colorado
Aspen Pitkin
(October 1-March 31 and
June 1-September 30)
Denver/Aurora Denver, Adams, Arapahoe,
and Jefferson
Grand Lake Grand
(December 1-March 31)
Silverthorne/Breckenridge Summit
(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
(December 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
(February 1-April 30)
Vero Beach Indian River
(December 1-April 30)

Georgia
Jekyll Island/Brunswick Glynn
(March 1-July 31)

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

Maine
Bar Harbor/Rockport Hancock and Knox
(July 1-August 31)

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

Massachusetts
Boston/Cambridge Suffolk, City of Cambridge
(October 1-November 30 and
March 1-September 30)
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
Traverse City Grand Traverse
(July 1-August 31)

Minnesota
Duluth St. Louis
(June 1-August 31)

New York
Lake Placid Essex
(July 1-August 31)
New York City Bronx, Kings, New York, Queens,
and Richmond
Oregon
Portland Multnomah
(October 1-October 31 and
April 1-September 30)
Seaside Clatsop
(July 1-August 31)

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

Rhode Island
Jamestown/Middletown/Newport Newport
(June 1-August 31)

South Carolina
Charleston Charleston, Berkeley, and
(October 1-October 31 and Dorchester
March 1-September 30)

Texas
Pecos Reeves
(January 1-March 31)

Utah
Moab Grand
(October 1-October 31 and
March 1-September 30)
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
April 1-September 30)

Wyoming
Cody Park
(June 1-September 30)

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Jackson/Pinedale Teton and Sublette
(July 1-August 31)

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 2017-54.
a. The following localities have been added to the list of high-cost localities:
Sedona, Arizona; Los Angeles, California; San Diego, California; Vero Beach,
Florida; Jekyll Island/Brunswick, Georgia; Duluth, Minnesota; Pecos, Texas;
Moab, Utah; Cody, Wyoming.
b. The following localities have changed the portion of the year in which they are
high-cost localities: Oakland, California; Aspen, Colorado; Boca Raton/Delray
Beach/Jupiter, Florida; Naples, Florida; Bar Harbor/Rockport, Maine;
Boston/Cambridge, Massachusetts; Jamestown/Middletown/Newport, Rhode
Island; Charleston, South Carolina; Vancouver, Washington; Jackson/Pinedale,
Wyoming.
c. The following localities have been removed from the list of high-cost localities:
Mill Valley/San Rafael/ Novato, California; Steamboat Springs, Colorado;
Petoskey, Michigan; Saratoga Springs/Schenectady, New York.
d. The following localities have been redefined: Traverse City, Michigan no longer
includes Leland; Bar Harbor, Maine now includes Rockport.
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, 2018, for travel away from home on or after October 1, 2018. For
purposes of computing the amount allowable as a deduction for travel away from home,

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this notice is effective for meal and incidental expenses or for incidental expenses only
paid or incurred on or after October 1, 2018. See sections 4.06 and 5.04 of Rev. Proc.
2011-47 (or successor) for transition rules for the last 3 months of calendar year 2018.
SECTION 7. EFFECT ON OTHER DOCUMENTS
Notice 2017-54 is superseded.
DRAFTING INFORMATION
The principal author of this notice is Maxine Woo-Garcia of the Office of
Associate Chief Counsel (Income Tax & Accounting). For further information regarding
this notice contact Maxine Woo-Garcia at (202) 317-7005 (not a toll-free call).