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Annually, the IRS issued updated amounts and information with respect to per diem rates for employee business expenses under I.R.C. Section 274(d).  The 2020-2021 information has been released in the form of IRS Notice 2020-71.


Troas Bible College (TBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are required to file Form 990 annually.

2020 – as we all know – has been an interesting year.  There has been a reduction in “business travel” for most institutions.  The folks at TBC asked us some questions about “per diem” rates for substantiating business expenses.

In Notice 2020-71, the IRS released the 2020-2021 (October 1, 2020 – September 30, 2021) updated per diem rates and list of high-cost locations.  The per diem for travel to high-cost localities has decreased from $297 to $292 ($71 for M&IE – meals and incidental expenses), while the rate for travel to other localities has decreased from $200 to $198 ($60 for M&IE). The incidental-expenses-only rate remains at $5 per day.

The TBC Accounting Team asked, “How do we know if an area is a ‘high-cost locality’ – is there a list or chart?”

“Yes, there is,” we reply.  “Going into the per diem year beginning October 1, 2020, the list is found in two places.  The most recent full listing is found in Section 5 of IRS Notice 2019-55 (which provides per diem data for the year from October 1, 2019 – September 30, 2020).  The high-cost cities and counties – delineated by state – are enumerated there.  Additions, changes, and removals to/from the list for the upcoming year are found in IRS Notice 2020-71, Section 5.03.”



From IRS Notice 2020-71 – September 11, 2020:

  1. Changes in high-cost localities. The list of high-cost localities in this notice differs from the list of high-cost localities insection 5 of Notice 2019-55.
  • The following localities have been added to the list of high-cost localities: Los Angeles, California; San Diego, California; Gulf Breeze, Florida; Kennebunk/Kittery/Sanford, Maine; Virginia Beach, Virginia.
  • The following localities have changed the portion of the year in which they are high-cost localities: Sedona, Arizona; Monterey, California; Santa Barbara, California; District of Columbia (see also Maryland and Virginia); Naples, Florida; Jekyll Island/Brunswick, Georgia; Boston/Cambridge, Massachusetts; Philadelphia, Pennsylvania; Jamestown/Middletown/Newport, Rhode Island; Charleston, South Carolina.
  • The following localities have been removed from the list of high-cost localities: Midland/Odessa, Texas; Pecos, Texas.



  • This may be a good year to look at using per diem rates to substantiate and reimburse employee business expenses.
  • Remember the “year” for per diem rates is October 1 – September 30.
  • The 2017 “Tax Cuts and Jobs Act” suspended miscellaneous itemized deductions for individual taxpayers though 2025.
  • “Incidental expenses” are defined by the IRS in Rev. Proc. 2019-48 as, “fees and tips given to porters, baggage carriers, bellhops, hotel staff, and staff on ships.”

Specific questions? Email Dave Moja

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.

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