Key takeaways
- Per diem has two parts: lodging and M&IE (meals and incidental expenses). For FY2027 (Oct 1, 2026 to Sep 30, 2027) the GSA standard CONUS rate is $113 lodging and $68 M&IE.
- On the first and last day of a trip, M&IE is paid at 75% of the daily rate.
- Per diem paid at or below the federal rate under an accountable plan isn’t taxable. Amounts above it are taxable unless returned.
- Self-employed people can use the M&IE rate for meals, but must deduct actual lodging costs with receipts, per IRS Publication 463.
What is per diem?
Per diem is Latin for “per day.” Instead of collecting a receipt for every coffee and sandwich on a trip, the employer pays a set amount for each day the employee is away. It’s simpler for both sides: the employee doesn’t have to track every meal, and the employer knows the cost in advance.
Federal employees get per diem by law. Private employers aren’t required to offer it, but many use the federal rates because the IRS treats payments up to those rates as already substantiated for the amount.
What per diem covers
Hotel room and lodging taxes. Varies widely by city and season.
Breakfast, lunch and dinner, including tips on meals.
Tips for porters, baggage carriers and hotel housekeeping.
Meals and incidentals are combined into one daily M&IE rate. Airfare, rental cars, taxis, parking and baggage fees are not part of per diem; they’re reimbursed separately from receipts. See the GSA’s M&IE breakdown for how the daily rate splits by meal.
How rates are set
- CONUS (the 48 contiguous states and DC): the General Services Administration sets rates every federal fiscal year, starting October 1. Around 300 cities and counties have their own rates; everywhere else uses the standard rate. Look up any ZIP code on the GSA per diem tool.
- OCONUS: the Department of Defense sets rates for Alaska, Hawaii and US territories, and the State Department sets foreign rates.
- High-low method: instead of hundreds of local rates, employers can use the IRS’s simpler two-tier rates, published each fall.
For FY2027, the GSA raised the standard lodging rate by $3 to $113 and kept the standard M&IE rate at $68, with M&IE tiers from $68 to $92 in higher-cost areas.
How to calculate per diem, including travel days
The formula is simple once you know the travel-day rule: on the day you leave and the day you return, you get 75% of the M&IE rate. Full days in between get 100%. Lodging is paid per night.
A three-day trip, two nights, to a city with the standard rate ($113 lodging, $68 M&IE):
| Day | M&IE | Lodging | Total |
|---|---|---|---|
| Day 1 (travel) | $68 × 75% = $51.00 | $113 | $164.00 |
| Day 2 (full) | $68.00 | $113 | $181.00 |
| Day 3 (travel) | $68 × 75% = $51.00 | — | $51.00 |
| Trip total | $170.00 | $226 | $396.00 |
Try your own trip:
The calculator uses the FY2027 standard rates by default. Replace them with the rates for your destination from the GSA site.
Per diem vs actual expenses
| Per diem | Actual expenses | |
|---|---|---|
| How it’s paid | Fixed daily amount | Exact cost from each receipt |
| Meal receipts needed? | No (still prove time, place, purpose) | Yes for $75+ and all lodging |
| Admin effort | Low | Higher |
| Best for | Frequent travelers, cheap-to-moderate cities | Expensive cities, client dinners, short trips |
| Risk | May not cover a pricey city | Missing receipts mean missing money |
Which is better for you? If you eat simply on the road, per diem often pays more than you spend and you keep the difference. If you’re hosting client dinners in New York, actual expenses will usually reimburse more. Some employers let you choose per trip; others set one method in the expense policy.
Tax treatment
Under an accountable plan, per diem up to the federal rate isn’t taxable, as long as the employee proves the time, place and business purpose of the travel. The amount is treated as substantiated, so meal receipts aren’t needed. If the employer pays more than the federal rate, the excess is taxable wages unless the employee returns it. Employers that pay per diem without requiring any trip details are running a non-accountable plan, and the whole allowance becomes taxable.
When the employer or a self-employed person deducts the M&IE portion, the usual 50% limit on meals applies. Workers subject to Department of Transportation hours-of-service rules, such as long-haul truck drivers, can deduct 80%.
Receipts still needed for lodging
Per diem doesn’t mean “no receipts.” Self-employed people can use the M&IE rate for meals but must deduct the actual cost of lodging, which means keeping the hotel folio. Many employers also ask for folios even when they pay a lodging per diem, to confirm the employee actually stayed overnight. And every traveler still needs records of where they went, when and why.
Per diem and lodging, on one report
Add per diem days to a Manage Receipt expense report and attach the hotel folio, airfare and ground transport receipts alongside. The report shows the trip dates, destination and purpose that the IRS asks for, so per diem stays tax-free and lodging has the receipt it needs.
Explore AI Expense ReportsFrequently asked questions
Is per diem taxable?
Not if it’s paid under an accountable plan at or below the federal rate and you document the time, place and business purpose of the trip. Any amount above the federal rate is taxable wages unless you return it. Per diem paid without any trip records is fully taxable.
Can self-employed people use per diem?
Partly. Self-employed people can use the federal M&IE rate to figure meal expenses instead of keeping meal receipts, subject to the 50% meal limit. They can’t use a per diem rate for lodging and must deduct the actual hotel cost with receipts.
Can employees keep unused per diem?
Yes. If your employer pays per diem at or below the federal rate and you document the trip, you keep any amount you don’t spend, tax-free. If the per diem is above the federal rate, the excess is taxable unless you return it to your employer.
What are the GSA per diem rates for 2027?
For federal fiscal year 2027, which runs from October 1, 2026 to September 30, 2027, the standard CONUS rate is $113 per night for lodging and $68 per day for meals and incidentals. Many cities have higher rates; check the GSA lookup tool by ZIP code.
What is the 75% rule for per diem?
On the first and last day of travel, you receive 75% of the daily M&IE rate instead of the full amount, because you’re only traveling for part of the day. At the $68 standard rate, that’s $51 for each travel day. Lodging is paid per night.