Blog · 14 October 2026

Per Diem Rates Under Notice 2026-60: High-Low $329/$230, Locality Changes and What US CPA Firms Should Tell Clients

By Keshav Bansal, CA

Per diem rates under IRS Notice 2026-60 rise for travel on or after October 1, 2026. The optional high-low method moves to $329 for high-cost CONUS localities and $230 for other CONUS localities (up from $319 and $225 under Notice 2025-54). Meal portions for §274(n) stay at $86 / $74. For US CPA firms, the work is updating accountable-plan tables, checking high-cost locality lists, and deciding whether to keep Notice 2025-54 rates for the last three months of 2026 under the Rev. Proc. 2019-48 transition rules.

What Notice 2026-60 sets

Notice 2026-60 (IRS GuideWire, September 24, 2026; to appear in IRB 2026-43 dated October 19, 2026) supersedes Notice 2025-54 and provides the 2026–2027 special per diem rates taxpayers may use under Rev. Proc. 2019-48 to substantiate ordinary and necessary travel-away-from-home expenses. Per the notice text:

• High-low lodging + M&IE: $329 high-cost / $230 other CONUS
• §274(n) meal portion of those rates: $86 high-cost / $74 other CONUS (unchanged)
• High-low M&IE-only: $86 high-cost / $74 other CONUS
• High-cost threshold: localities with a federal per diem rate of $280 or more
• Transportation-industry M&IE: $80 CONUS / $86 OCONUS (unchanged)
• Incidental-expenses-only deduction: $5 per day (unchanged)

As summarized by the Journal of Accountancy (Martha Waggoner, September 24, 2026) and Thomson Reuters Tax & Accounting, the high rate rises $10 and the low rate $5 versus Notice 2025-54. Taxpayers using these rates must still follow Rev. Proc. 2019-48.

Effective date and the Oct–Dec 2026 transition

Per Section 6 of Notice 2026-60, the notice is effective for per diem allowances paid to an employee on or after October 1, 2026, for travel away from home on or after October 1, 2026, and for computing deductible M&IE or incidental-only amounts paid or incurred on or after that date. It points to sections 4.06 and 5.04 of Rev. Proc. 2019-48 for transition rules for the last three months of calendar year 2026.

Under Rev. Proc. 2019-48 §5.04, for travel in the last three months of a calendar year: (1) a payor must continue the same method (per diem under §§4.01 or 4.02, or high-low) for an employee as used in the first nine months; and (2) a payor may use either the rates and high-cost localities in effect for the first nine months or the updated October–December rates and list, if the same rates and localities are used consistently for all employees reimbursed under the high-low method. In short, employers using the high-low method may keep Notice 2025-54 rates through year-end only if they apply the same rates and localities consistently to all high-low employees. Document the firm’s choice in writing before the first October voucher.

High-cost locality list changes

Notice 2026-60 section 5 lists how the high-cost localities differ from Notice 2025-54:

• Added: Tucson, Arizona; San Mateo/Foster City/Belmont, California; Albuquerque, New Mexico; Cody, Wyoming
• Removed: Panama City, Florida
• Changed portion of the year: 15 localities, including Napa, South Lake Tahoe, Yosemite National Park, Aspen, Steamboat Springs, Telluride, Fort Myers, Falmouth, Toms River, New York City, Philadelphia, Hilton Head, Manchester, Montpelier, and Port Angeles/Port Townsend
• Correction: Sun Valley/Ketchum, Idaho (portion-of-year correction)

Many high-cost designations are seasonal. Tucson (Pima) is listed January 1–March 31; Albuquerque (Bernalillo) October 1–March 31; Cody (Park) June 1–September 30; San Mateo/Foster City/Belmont year-round. Do not treat a city as “always high” without checking the notice’s calendar window.

Accountable plans, §274(n) and who can deduct

Per diem under Rev. Proc. 2019-48 substantiates the amount of lodging and/or M&IE. Employees still must substantiate time, place and business purpose. Amounts paid under an accountable plan (business connection, substantiation, return of excess) are generally excluded from wages; amounts under a nonaccountable plan are wages on Form W-2, as the revenue procedure summarizes.

Rev. Proc. 2019-48 also notes that §274(n) generally limits food or beverage deductions to 50% of the otherwise allowable amount, and that for individuals subject to Department of Transportation hours-of-service limitations, §274(n)(3) provides an 80% deductible percentage for taxable years beginning in 2008 or thereafter. The $86 / $74 meal portions in Notice 2026-60 are the amounts treated as paid for meals for that limitation.

Self-employed taxpayers may use federal M&IE rates under the revenue procedure’s rules; W-2 employees generally cannot deduct unreimbursed employee travel after the permanent disallowance of miscellaneous itemized deductions subject to the 2% floor under §67 (as also noted in our standard mileage rates 2026 guide). That pushes clients toward employer accountable-plan reimbursements rather than Schedule A.

What US CPA firms should tell clients now

• Update rate tables for allowances paid on or after October 1, 2026, for travel on or after that date—or document a consistent Rev. Proc. 2019-48 §5.04 choice to keep Notice 2025-54 rates through year-end for all high-low employees.
• Refresh the high-cost list in expense software: add Tucson, San Mateo/Foster City/Belmont, Albuquerque and Cody; remove Panama City; apply the new seasonal windows for the 15 changed localities.
• Keep meal vs lodging split clear so §274(n) meals (50% or 80% DOT) are not overstated when only M&IE is paid.
• Separate employee vs self-employed messaging—employees need plan reimbursements; Schedule C filers need contemporaneous time/place/purpose logs even when amount is deemed substantiated.
• Align travel policies with other 2026 rate changes, including the mid-year Announcement 2026-11 mileage rates and year-end withholding themes on the draft 2027 Form W-4.

A short firm checklist

1. Decide by October vouchers: new Notice 2026-60 rates, or Notice 2025-54 rates through December 31 under §5.04 consistency.
2. Push the high-cost locality adds/drops and seasonal dates into the travel system; spot-check New York City, Philadelphia and the new Arizona/New Mexico/California/Wyoming entries.
3. Confirm transportation clients still use $80 / $86 M&IE only if they qualify for that special rate under Rev. Proc. 2019-48 §4.04.
4. Remind organizers that incidental-only remains $5/day—do not treat it as a full M&IE substitute when meals were incurred.
5. Tie travel workpapers to extension-season capacity; see the October 15, 2026 extension deadline checklist if travel reimbursements still sit in unfiled 2025 returns.

Where this fits for Tax Brew readers

Notice 2026-60 is a process update as much as a dollar update: high-low tables, locality calendars and a documented Oct–Dec transition choice. Soft optional rates never replace the binding substantiation and accountable-plan rules in the Code and Rev. Proc. 2019-48.

If travel expense cleanup, accountable-plan reconciliations or Schedule C drafts are stretching capacity, outsourced tax prep and bookkeeping support for US CPA firms can take the data gathering while your signing professionals keep the judgment calls. Email info@taxbrewglobal.com.

Check current IRS guidance: this article summarizes Notice 2026-60 (irs.gov/pub/irs-drop/n-26-60.pdf; GuideWire September 24, 2026; IRB 2026-43), Rev. Proc. 2019-48 (sections 4.06 and 5.04 and §274(n) discussion), Notice 2025-54 (superseded), and secondary summaries in the Journal of Accountancy (September 24, 2026) and Thomson Reuters. Per diem rates and locality lists change annually; confirm the notice text and current IRS.gov guidance before advising clients. This is general information, not tax or legal advice. Sources as of 14 October 2026.