Welcome News for the Trucking Industry - Clarification of 100% Meals and Entertainment Deduction for Per Diems

With all the current issues related to the driver shortage and supply chain disruptions, there was some welcome news from the IRS for the trucking industry. On November 16, 2021, the IRS issued Notice 2021-63 “Temporary 100 Percent Deduction Applies to Meal Portion of 2021 and 2022 Per Diem Rate of Allowance.”

This guidance clarified that motor carriers with drivers that are subject to the hours-of-service rules can deduct 100% of the meals portion of the per diem expense for the calendar years 2021 and 2022. The deduction was 80% before 2021 and will return to 80% after 2022. In April 2021, the IRS issued guidance related to the temporary 100% restaurant meals deduction that was enacted into law under the tax act passed in December 2020. One reason this law was passed was to assist the restaurant industry as it struggled with the impacts of the COVID-19 pandemic.

The per diem amount covers meals and incidental expenses when traveling away from home. The per diem rate was updated by the IRS effective October 1, 2021. Currently, the rate is $69 for travel in the continental United States and $74 outside the continental United States. Of this amount, $5 would be considered incidental and may be subject to the 80% deduction rule.

If you have any questions, please contact me or any members of our Transportation Industry Advisors noted below:

Jim Gilboy – Senior Manager, Tax Advisory Services
[email protected]

Matt Werner – Shareholder, Tax Advisory Services
[email protected]

Carl Scharf – Shareholder, Tax Advisory Services
[email protected]

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