Commercial Services

For fiscal year 2022, beginning October 1, 2021, and ending September 30, 2022, the special trucker per diem rate is $69 for travel within the continental U.S.—a $3 increase from the prior year’s rate of $66. The U.S. General Services Administration (GSA) is responsible for setting per diem rates for the continental United States. The GSA traditionally evaluated meals and incidental expenses every three to five years but started reviewing rates every three years for the 2016 fiscal year. As inflation is spreading across all sectors as we move into the second quarter of 2022, the $3 increase to per diem for fiscal year 2021 seems dismal considering per diem had not been adjusted since the rate was raised from $59 to $63 effective October 1, 2015. If the current pattern continues and no special adjustments are made, we can expect to wait until 2024 for another $3 to $4 increase to per diem rates.
Effective through September 30, 2022, the current per diem rate for meals is 80 percent of $69 per day; however, the meal portion of per diem qualifies for the temporary exception to the 50 percent limit on the amount that businesses may deduct for food or beverages. Included in the Taxpayer Certainty and Disaster Relief Act of 2020, this exception allows a 100 percent deduction for food and beverages purchased at restaurants in 2021 and 2022. Furthermore, IRS Notice 2021-63 confirms the meal portion of per diems is deductible at 100 percent and states taxpayers can take the 100 percent deduction of the meals portion of per diem without having to maintain proof the meals were purchased from a restaurant. While the 100 percent deduction is currently set to expire at the end of 2022, it is prudent to check in on how your team is treating per diem and meals expenses to help ensure you are receiving the full available tax savings. The 100 percent deduction for meals purchased at restaurants was enacted to help the restaurant industry recover from the negative impacts of COVID-19; however, this 100 percent deduction is becoming increasingly more beneficial to all taxpayers as the U.S. Bureau of Labor Statistics reports that consumer prices for food were up 7.9 percent for the 12-month period ending February 28, 2022.
In addition to rising inflation, employers in the U.S. also are seeing the labor market continue to tighten. Now is a great time to consider if a per diem program could be a good fit into your team’s recruitment and retention programs. For companies, the per diem paid to drivers is deductible from company taxable income since the payment is a reimbursement to cover away-from-home expenses incurred by drivers. The driver is then allowed to exclude per diem from their taxable income, thus increasing their take-home pay. Companies also can lower their payroll tax expense through paying out per diem, as per diem is not included as wages in the payroll tax calculation. There are many considerations to be made when deciding how per diem will be included in your compensation structure. Check in with your team and your accountant to assess what works best for your situation.

Lastly, check that your team is complying with the IRS rules regulating when per diem is allowable as a deduction. There are two primary qualifications to meet for per diem tax deductions according to IRS Publication 463. 1) You are away from your tax home for “substantially longer” than an ordinary day’s work. 2) Your work requires you to sleep or rest while you are away from home. A “partial day,” a day in which you are leaving or returning home, receives a prorated per diem rate of three-fourths of a full day. And as always, remember to maintain support of per diem claims through good record-keeping.

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