The per diem rate most truckers rely on will not move when the new fiscal year begins October 1, but companies using the High-Low Substantiation Method will pay more.

The IRS said last week that its transportation-specific meals and incidental expense rate will remain $80 per day for travel within the continental U.S. and $86 for travel outside it. That rate applies specifically to workers in the transportation industry, and the decision to hold it steady means carrier payroll and tax calculations built around the current figure carry into the fiscal year without adjustment.

For truck drivers, per diem is more than a tax footnote. TBros, a Minnesota-based carrier, describes the transportation per diem as "the daily allowance the IRS lets truck drivers deduct for meals and incidental costs while they're away from home. It simplifies record-keeping and often lowers taxable income more than tracking every receipt."

That simplicity has commercial weight. For over-the-road carriers competing for drivers, per diem plans are a standard part of compensation packages — they reduce a driver's taxable income without requiring the company to raise base pay. A flat rate for another year means fleets can model driver take-home pay with no re-engineering of payroll systems, and drivers see no change in the deduction value they were promised.

The other track is different. For companies using the High-Low Substantiation Method, the rates will rise to $329 per day, up from $319, for travel to areas designated as high-cost, and to $230, up from $225, for all other areas. That method is available to all companies, not just those in transportation.

The High-Low method is an alternative to the standard per diem substantiation method, which sets rates locality by locality. By collapsing thousands of localities into just two buckets — high-cost and everything else — the high-low system simplifies reporting and payment. The accounting firm Thomas, Zollars & Lynch, writing on its site that tracks federal tax policy, has described it as "an alternative to the locality-by-locality federal rates…this method allows a payor to use one rate for designated high-cost localities within the continental U.S. (CONUS) and another for all other CONUS localities."

The geography behind the high-cost list is less intuitive than it might appear. It is not simply a roster of big cities like New York and Los Angeles. Nor is a designation necessarily in force for the full calendar year.

Gulf Shores, Alabama carries the high-cost designation only between June 1 and July 31. Aspen, Colorado holds it virtually all year except October and November. New York City holds it for all 12 months. And Panama City, Florida, which had been on the list previously, is off it entirely in the latest IRS release.

For freight and logistics companies, the split decision creates two different budget pictures. Fleets that stick with the transportation-specific rate face no change — the $80/$86 structure carries forward. Companies that reimburse travel under the High-Low method, including shippers and forwarders sending staff into the field, will absorb increases of $10 per day in high-cost markets and $5 per day elsewhere.

The seasonal structure of the high-cost list also matters for planning. A logistics manager booking project travel to Gulf Shores in June faces a $329 daily rate; the same trip in September falls under the $230 bucket. Teams heading to Aspen in October or November get the lower rate, while a January trip does not. And Panama City's removal from the list this year means any budget assumptions built on last year's designations need a refresh.

The practical divide between the two systems remains. The transportation rate rewards the industry with a simplified, single figure tailored to drivers on the road. The High-Low method trades granularity for administrative ease, and its annual upward creep — modest this year at roughly 3% for high-cost areas and 2% for the rest — reflects the steady rise in travel costs the IRS measures through its annual survey process.

Carriers and shippers preparing fiscal-year budgets should lock in the new figures now. With the transportation per diem flat and High-Low rates effective for the year starting October 1, the next data point to watch is the IRS's annual update cycle, which has historically moved these rates in small, cost-of-living-driven increments.