Carriers: IRS Clarifies 100% Deduction for Meal Portion of Per Diem

On Nov. 16, the IRS released Notice 2021-63, which makes it clear that the meal portion of per diem expenses incurred in 2021 and 2022 will be deductible at 100%. Generally, taxpayers are only able to deduct 50% of the expenses they incur for food and beverage in the course of their business. However, when Congress enacted the Taxpayer Certainty and Disaster Relief Act of 2020, it allowed for taxpayers to deduct 100% of food and beverage purchased at a restaurant during 2021 and 2022. Until Notice 2021-63 was issued, it remained unclear how the 100% deduction would apply per diems paid for meals.

Although there is still some discussion as to the amount of the per diem that will be deductible at 100%, it seems that taxpayers who pay per diems as part of an accountable plan will be able to deduct the lower of the per diem amount actually paid for meals and incidental expenses or the standard per diem rate for meals and incidental expenses as provided by the IRS (currently $69 per day). In doing so, the taxpayer will not be required to obtain receipts to show that the food or beverages purchased using the per diem were purchased from a restaurant in order to receive the 100% deduction.

For more information, please contact your KSM representative or complete this form.