Per Diems 100% Deductible for Tax Years 2021 & 2022

Per Diems 100% Deductible for Tax Years 2021 & 2022

by Tony Oster, CPA

November 19, 2021 - On November 16, 2021, the IRS issued guidance which clarified that the meal portion of per diems is eligible to be treated as 100% deductible for 2021 and 2022. Per diem payments are sometimes made to employees who travel and consist of two partsβ€”an amount for lodging and an amount for meals. Prior to the guidance, there was uncertainty as to whether per diem payments would be eligible for the new rules allowing a temporary 100% deduction for meals provided by restaurants.

This clarification will provide a huge tax benefit for companies that normally have large per diem payments such as trucking companies, construction companies and companies with large sales departments.

Historically, meals provided by restaurants have only been 50% deductible to businesses. However, the Taxpayer Certainty and Disaster Relief Act of 2020 provided a temporary exception to this 50% deduction limitation.  For expenses paid or incurred in 2021 and 2022, businesses will be allowed a 100% deduction for meals provided by restaurants.

For more information on the 100% exclusion and general meals and entertainment rules, see our article How to Deduct Meals and Entertainment in 2021.

Tony Oster, CPA

Tony Oster, CPA

Tony Oster, CPA, is a senior manager in the commercial business tax service area of Redpath and Company. He assists clients with tax planning and projections, preparation of complex flow-through and C-Corporation tax returns and has vast experience in multi-state and international taxation. Tony works with a variety of clients in industries such as manufacturing, construction and other closely-held businesses. He has provided public accounting services at Redpath and Company since 2001.