Per Diem Rates

A per diem is a fixed daily allowance an employer pays for travel costs, usually lodging and meals and incidental expenses (M&IE), instead of reimbursing every receipt. This entry covers travel per diem, not healthcare per diem or PRN shift pay.

Most U.S. employers anchor the amount to federal rates. For fiscal year 2027, the General Services Administration (GSA) set the standard rate for most of the continental U.S. at $181 a day.

How Do GSA Federal Per Diem Rates Work?

GSA splits each daily rate into a lodging cap and an M&IE amount. Fiscal year 2027 covers travel from October 1, 2026 through September 30, 2027. The standard rate for the continental U.S. (CONUS) is $113 for lodging plus $68 for M&IE.

The same notice says lodging rises $3 after a freeze in fiscal year 2026, while M&IE stays at $68. It lists 295 non-standard areas with higher lodging caps and M&IE tiers from $68 to $92.

On the first and last day of travel, GSA's M&IE breakdown shows $51 at the $68 tier, which is 75 percent.

What Does the IRS Require for Per Diem Under an Accountable Plan?

Per diem stays tax free for the employee only under an accountable plan. IRS Publication 463 sets three tests: a business connection, adequate accounting to the employer, and return of any excess, each within a reasonable period.

The publication gives a safe harbor: an advance within 30 days of the expense, accounting within 60 days, and return of excess within 120 days. An allowance at or below the federal rate stays out of Box 1 of Form W-2.

Employers can use the regular federal rate or the high-low method. Under IRS Notice 2026-60, the 2026-2027 high-low rates are $329 for high-cost localities and $230 elsewhere in CONUS, with M&IE of $86 and $74. Rev. Proc. 2019-48 governs the method.

How Are Foreign Per Diem Rates Set?

For travel outside the continental U.S., the State Department's Office of Allowances sets maximum per diem rates for all foreign areas. It posts them by country and location on its foreign per diem site.

These rates suit short trips. Long-term postings use other pay structures, such as the Expatriate Allowance and Host vs Home Country Pay.

Why Do Employers Use Per Diem Instead of Actual Expenses?

Per diem cuts paperwork. Employees show the time, place and business purpose of a trip, but not every meal receipt.

Actual-expense reimbursement fits trips where costs vary widely. Many companies mix both, paying per diem for meals and actual cost for lodging, and write the rule into a company travel policy template.

Mileage follows its own rules. See our guides to gas and mileage reimbursement and the federal gas rate.

What Happens When Per Diem Falls Outside an Accountable Plan?

Payments that fail the accountable plan tests become nonaccountable. The employer combines them with wages, and Publication 463 says they appear as pay in Box 1 of Form W-2.

Amounts above the federal rate get the same treatment. Wage treatment generally brings federal income tax withholding and payroll taxes such as Social Security tax.

Three habits keep per diem inside an accountable plan.

• Write the plan down, including eligible expenses, the rate source and reporting deadlines.
• Collect excess advances inside the 120-day window.
• Pay anything above the federal rate through payroll as wages.

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Frequently Asked Questions

Q: Where do I find the rate for a specific U.S. destination?

A: GSA's per diem page offers a rate lookup, downloadable files, an API and a trip calculator.

Q: What counts as a high-cost locality for the high-low method?

A: Notice 2026-60 defines it as a locality with a federal per diem rate of $280 or more, sometimes only for certain months.

Q: Can an employer switch to the high-low method in the fourth quarter?

A: Generally no. Publication 463 says employers that did not use the method in the first nine months of a year cannot begin before the next year.

Q: Does the high-low method work for foreign trips?

A: No. Notice 2026-60 sets the high-low rates for travel within the continental United States only.

Q: Is there a special M&IE rate for transportation workers?

A: Yes. Notice 2026-60 sets $80 for any CONUS locality and $86 for any locality outside CONUS for the transportation industry.

Q: Is there a per diem for incidental expenses only?

A: Yes. The IRS sets a rate of $5 per day for the incidental expenses only deduction, for any CONUS or foreign locality.