Per Diem Rates Set to Increase for the Transportation Industry October 1st
Per diem pay was a hot topic when the Tax Cuts and Jobs Act changed the law and made it so that W-2 employee drivers who did not receive per diem pay from their employer could not claim an itemized deduction on their personal tax returns. It may well be a hot topic again. For self-employed individuals and companies in the transportation industry who choose to pay their employee drivers a per diem the cost is set to increase. A self-employed individual or W-2 employee is in the transportation industry if their work directly involves moving people or goods by airplane, barge, bus, ship, train, or truck and their work involves regularly traveling away from home during any single trip and usually involves traveling to locations with different federal meals and incidental expense rates. After remaining flat since the 2018/2019 increase, the special meals and incidental per diem for the transportation industry will go up by $3 effective October 1, 2021. Rates are set to increase from $66 to $69 for travel in the continental United States and from $71 to $74 for travel outside the continental United States. That’s a little over a 4% increase in a cost that can be significant and generally 50% deductible by the company on the annual tax return. If the self-employed individual or employees are subject to the hours-of-service rules the cost is 80% deductible. See IRS Notice 2021-52 if you’d like to know more.
Nathan is a CPA and has more than ten years of experience providing tax planning, consulting and compliance services to a number of privately held businesses and individuals in a variety of industries, with a special focus on the transportation and logistics industry. He actively communicates with clients and seeks ways to align their individual and business goals with available tax strategies to allow them to make well-informed decisions.
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