The IRS recently released Notice 2021-52 which announced an increase in the Special Per Diem Rates for 2021 – 2022 for the Transportation Industry. The rate for Meals and Incidental Expenses has been increased to $69 from $66 for travel in the continental United States.
For travel outside of the continental United States, the rate has increased to $74 from $71. The new rates will be effective on October 1, 2021. If your transportation company currently has a per diem program in place, you will want to update your per diem calculations to meet the October 1, 2021 effective date.
If your transportation company has not adopted a per diem program for your company drivers, then now may be a great time to examine if this expense reimbursement program could help with driver retention and recruitment. A per diem payment is a reimbursement, as defined in the Internal Revenue Code and Regulations, designed to cover meals and incidental expenses of drivers when they are away from home. The transportation company is allowed a tax deduction for the per diem paid and the only record-keeping consists of logging days away from home for your drivers. The driver collects the reimbursement for the expenses, and that reimbursement is not included in the driver’s taxable compensation. Per diem programs in the industry have become very attractive after the Tax Cut and Jobs Act of 2017 eliminated the employee business expense deduction that many company drivers used to deduct these expenses from their personal income tax returns before 2018.
Independent drivers will also be able to use the new per diem rates to deduct their meals and incidental expenses while away from home on their tax returns.
In this competitive labor market, having per diems treated as nontaxable income for your drivers could be a great recruiting and retention tool. If you would like to learn more about how your trucking company could benefit from a per diem program, please contact me or one of our Transportation Industry Advisors noted below:
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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.