Tax rules · rates of IRS notices
The IRS high-low per diem method
Count the days an employee spent in listed high-cost localities and elsewhere in CONUS: the tool applies the high and low rates of the period you choose.
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Per diem under the high-low method
$1,348
$329 high, $230 low (Notice 2026-60)
| Meal part (subject to the 50% limit) | $394 |
| Lodging and incidentals part | $954 |
| Meal part deductible at 50% | $197 |
High-cost localities are those with a federal per diem of $280 or more for the period listed in the notice. Full and partial days follow the payor's method. How this is calculated.
The high-low method replaces the GSA table with two daily rates for lodging, meals and incidentals: $329 for travel to a listed high-cost locality and $230 for any other place in the continental United States, for travel from October 1, 2026 under IRS Notice 2026-60. Before that date the figures were $319 and $225 (Notice 2025-54). Of each rate, $86 and $74 count as the meal part, the share that falls under the 50% limit on the payor's meal deduction. A locality makes the list when its federal per diem reaches $280 for some part of the year, up from $272 in the previous notice. Only an employer or other payor can use the method, and only for CONUS trips. Once it picks high-low for an employee, it keeps it for every CONUS trip of that employee in the calendar year, and the last three months of 2026 follow a transition rule.
Two numbers instead of a table
$329 or $230: under Notice 2026-60 that is the whole rate card for an employer's CONUS travel from October 1, 2026, instead of a GSA lookup by county and month. The amount deemed substantiated each day is the lesser of the allowance paid and the applicable rate, exactly as with the regular per diem method, and no lodging receipt is needed for the amount. The appeal is plain: one line in a travel policy replaces a table of 295 non-standard areas and their monthly caps. The trade-off is precision, and the direction of the error depends on the city and the month.
High-low or the city rate?
High-low ceiling
$920
| 4 × $230 (Notice 2026-60) | $920 |
| 4 × $181 at the GSA rate | $724 |
| High-low pays more by | $196 |
An employer must keep one method for an employee for the whole calendar year.
Chicago in October and in December
Notice 2026-60 lists Chicago (Cook and Lake counties) as high-cost from October 1 to November 30 and from April 1 to September 30. In October 2026 the GSA rate is $232 of lodging plus $92 of M&IE, $324 a day, and high-low pays $329: almost the same. In December Chicago drops off the list, so high-low pays the low $230 while GSA would allow $240. New York City sits on the list all year, yet its October GSA rate of $450 is far above $329. At the other end, a standard-rate county gets $230 under high-low against $181 from GSA, a gain for the traveler.
Who may use it, and how long the choice lasts
The rules sit in section 5 of Rev. Proc. 2019-48. High-low is for payors that pay a per diem allowance instead of reimbursing actual costs. Employees and self-employed people cannot use it to figure a meal deduction on their own return. A payor that uses it for an employee must use it for all of that employee's CONUS travel in the calendar year; for trips outside CONUS it may use actual costs or the regular federal rates (the OCONUS page explains those). Neither high-low nor a lodging-plus-M&IE per diem at the regular federal rates is available when the payor and the employee are related parties, which for this purpose means 10% ownership.
October to December 2026: the transition
The notice applies from October 1, but the IRS works by calendar year. For travel in the last three months of 2026, a payor must keep the method it used for that employee in the first nine months: an employer on the regular GSA rates cannot switch to high-low in October, and one on high-low cannot leave it before January. Within high-low, it may keep the $319 and $225 rates and the old list of localities through December 31, or move to $329 and $230 with the new list, as long as it does the same for every employee paid under high-low (section 5.04).
The meal part and the list changes
The meal shares did not move: $86 and $74 in both notices. They matter for the payor's deduction, since that part of each day is food and beverage and deductible at 50%, and they double as the M&IE-only rates when the employer pays lodging itself. An employee with 40 high-cost days and 60 other CONUS days in a year can receive up to $26,960 tax-free under high-low, of which $7,880 is the meal part.
Notice 2026-60 added four localities to the list (Tucson, Arizona; San Mateo, Foster City and Belmont, California; Albuquerque, New Mexico; Cody, Wyoming), removed Panama City, Florida, and changed the high-cost months of fifteen others, New York City and Philadelphia among them. A trip priced at the exact GSA rate of the city stays one click away in the per diem calculator, and the tax treatment of any excess is on the travel reimbursement page.