December 2017 Update:
Beginning on Jan. 1, 2018, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
• 54.5 cents for every mile of business travel driven, up 1 cent from the rate for 2017.
• 18 cents per mile driven for medical or moving purposes, up 1 cent from the rate for 2017.
• 14 cents per mile driven in service of charitable organizations.
The IRS has provided the 2017-2018 special per diem rates for taxpayers to use to substantiate ordinary and necessary business expenses incurred while traveling away from home.
Effective date. This notice is effective for per diem allowances for lodging, meal and incidental expenses, or for meal and incidental expenses only, paid to any employee on or after October 1, 2017, for travel away from home on or after October 1, 2017. IRS Notice 2016-58, is superseded.
Transportation industry. The special M&IE rates for taxpayers in the transportation industry are $63 for any locality of travel in the continental United States (CONUS) and $68 for any locality of travel outside the continental United States (OCONUS). The rate for any CONUS or OCONUS locality of travel for the incidental expenses only deduction is $5 per day.
High-low method. For purposes of the high-low substantiation method, the per diem rates are $284 for travel to any high-cost locality and $191 for travel to any other locality within CONUS. The amount of the $284 high rate and $191 low rate that is treated as paid for meals is $68 for travel to any high-cost locality and $57 for travel to any other locality within CONUS. The per diem rates in lieu of the M&IE only substantiation method are $68 for travel to any high-cost locality and $57 for travel to any other locality within CONUS.
High-cost localities. Oakland, California has been added to the list of high-cost localities. Los Angeles, California has been removed from this list.
SOURCE: IRS Notice 2017-54, I.R.B. 2017-42, October 16, 2017.
Keep in mind, California employers must follow Labor Code sec. 2802 and reimburse employees for all reasonable and necessary business expenses. If you are using the IRS per diem reimbursement rate, you must inform employees before they incur any expenses. Otherwise, you will be required to provide reimbursement for the employee’s actual expenditures.