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New Per Diem Deduction Rates starting October 1

by | Aug 18, 2020 | Taxation

GSA website: FY2021 Per Diem Rates – Effective October 1, 2020

GSA website: FY 2021 Per Diem Highlights (updated August 13, 2020)

The General Services Administration (GSA) has posted the federal domestic per diem rate table for fiscal year (FY) 2021 on its website. The rates are in effect from October 1, 2020 to September 30, 2021.

Background. The per diem rate table is used by employers who pay a per diem allowance to employees for business travel away from home within the continental United States (CONUS). The per diem allowance is an alternative to reimbursing employees for their actual substantiated expenses for away-from-home lodging, and meals and incidental expenses (M&IE).

The per diem rate may not exceed the rate paid by the federal government to its workers on travel status. The rate varies by locality of travel. If employees provide simplified substantiation (time, place, and business purpose), the per diem reimbursement isn’t subject to income or payroll tax withholding and isn’t reported on the employee’s Form W-2, Wage and Tax Statement.

New rates. Standard CONUS rates apply to all counties not specifically listed in the GSA’s per diem rate table. Most of the CONUS (approximately 2600 counties) are covered by the standard CONUS per diem rate of $151 ($96 lodging, $55 M&IE). In FY 2021, there are 319 Non-Standard Areas (NSAs) that have per diem rates higher than the standard CONUS rate.

There are six possible M&IE rates ($55, $56, $61, $66, $71, and $76). These rates are the same as the rates for FY 2020. Lodging rates for locations listed in the per diem rate table range from $96 to $418 in FY 2021.

Per diem rates for localities that do not have standard rates (i.e., non-standard areas or NSAs) are listed in the per diem rate table. Total per diem rates by locality in FY 2021 range from $151 to $494. Telluride, CO (San Miguel) has the highest per diem rate in the table (i.e., $494 during the period from December 1, 2020 to March 31, 2021).

Albuquerque, NM (Bernalillo County) is a new NSA location in FY 2021. Additionally, the following counties that were previously NSAs, or were located in an NSA, move in to the standard CONUS rate category:

  1. Gainesville, FL (Alachua County);
  2. Atlantic City, NJ (Atlantic County and Cape May County);
  3. College Station, TX (Brazos County); and
  4. Abingdon, VA (Washington County).

Please Note: This was published today by Thompson-Reuters and is very important for many businesses. I take no credit for the content. If you have any questions, please call me. RJC