The IRS has increased its special per diem rates for business travel beginning October 1, 2026, through September 30, 2027.

Under IRS Notice 2026-60, the high-low rates for travel within the continental United States (CONUS) are:

• $329 per day for designated high-cost localities, up from $319.
• $230 per day for all other CONUS localities, up from $225.
• The meals and incidental expenses (M&IE) portion remains $86 for high-cost localities and $74 for other areas and is subject to the 50% limitation on the deduction for business meals.

What Is the High-Low Method?

The high-low method is an optional IRS-approved approach for reimbursing employees for business travel. Rather than using a different per diem rate for every location, employers use a higher rate for designated high-cost localities and a lower rate for all other CONUS locations.

This method can simplify travel reimbursement and expense reporting, but employers must consistently apply the applicable IRS rules and maintain appropriate documentation.

A Simple Example

Suppose an employee travels from Connecticut to New York City for a two-day business trip. Because New York City is a designated high-cost locality, the employer could use the $329 high-cost rate for qualifying travel days under the high-low method.

If the employee instead travels to a business meeting in Connecticut, where there are no designated high-cost localities, the $230 rate would generally apply.

The $329 and $230 rates represent the combined lodging and M&IE amounts. The applicable M&IE portion is separately identified for purposes of the federal business-meal deduction rules.

Updated High-Cost Localities

The IRS has also revised its list of designated high-cost localities. The list includes New York City and Saratoga Springs/Schenectady, along with several locations in Massachusetts and Florida.

No Connecticut localities are designated as high-cost areas under the new list. Accordingly, businesses using the high-low method will generally use the $230 rate for qualifying travel within Connecticut.

What Businesses Should Do

Businesses that use per diem reimbursements should review their travel policies, reimbursement procedures, and expense-reporting systems before October 1, 2026.

Employers should ensure that employees document the business purpose, travel dates, and destination of each trip and that the appropriate rate is used based on the travel location.

The special transportation-industry M&IE rates remain $80 per day for CONUS travel and $86 per day for OCONUS travel. The incidental-expenses-only rate remains $5 per day.

Need Help With Your Business Travel Policy?

The October 1 rate change is a good opportunity to review your company’s travel reimbursement policy and confirm that it continues to meet IRS requirements.

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