The IRS has released its 2026–2027 per diem rates for certain business travel expenses, effective Oct. 1, 2026. Under the high-low substantiation method, the rate for lodging, meals and incidental expenses for travel to high-cost localities within the continental United States (CONUS) rises to $329 per day, from $319. The rate for other CONUS localities rises to $230, from $225.
The portion attributable to meals remains $86 for high-cost areas and $74 for other areas. The incidental-expenses-only rate remains $5. Employers can pay more than the IRS per diem rates, but excess amounts generally must be substantiated or treated as taxable wages. Your tax advisor is available if you need guidance or have any questions.
The IRS has announced temporary nationwide tax penalty relief for the highway use of dyed diesel fuel. It's retroactive to Oct. 1, 2026, and applies through Dec. 31, 2026. Dyed diesel fuel, normally used for heavy construction and farming equipment, generally triggers federal excise tax and penalties when used on public roads.
During the relief period, the IRS will suspend certain penalties, enforcement activities and recordkeeping requirements. But state taxes and penalties may still apply. Additional IRS guidance on tax payment deferrals and reporting is expected. Contact your tax advisor for details on how the relief may affect your business.
Does your business receive advance payments from customers? For federal tax purposes, these payments generally are taxable in the year received. But accrual-basis businesses may have another option. If certain requirements are met, these businesses can defer some or all eligible advance payments to the next tax year. That means qualifying payments received in 2026 can be deferred to 2027.
Gift cards, software licenses, warranty contracts and subscriptions are examples of payments that may qualify for deferral — if the income won't be recognized for financial reporting purposes until next year. Contact your tax advisor to discuss whether advance payment deferral can be part of your year-end tax strategy.
As year end approaches, your business might want to review opportunities to deduct expenses in light of recent tax law. Most entertainment expenses, for example, remain nondeductible. But you may be able to deduct 50% of qualified business meals. And though qualified business travel costs are still 100% deductible, many commuting-related fringe benefits, such as mass transit passes, aren't.
In addition, employees can't claim deductions for unreimbursed business expenses. This may make establishing an accountable reimbursement plan valuable for both your business and its employees. Spend a little time now to identify expenses that could yield significant deductions later. If you have questions, your Porte Browntax advisor can help.
The Corporate Transparency Act (CTA) is intended to help authorities uncover crimes such as tax evasion and money laundering. But the National Small Business Association (NSBA) is asking the U.S. Supreme Court to determine whether the CTA is constitutional.
A 2026 U.S. Treasury Dept. rule exempted most domestic entities from CTA reporting requirements. But in a recent brief filed with the Court, NSBA argued the government can't use rulemaking to sidestep judicial review or fix constitutional defects in the CTA. NSBA is challenging the CTA under the Commerce Clause and Fourth Amendment. It warns that future administrations could restore broader reporting requirements if the law remains intact.
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