Whether you're a frequent traveler, a business owner, or simply curious about managing expenses, this guide will give you the essentials to navigate per diem rates effectively.
What is meant by per diem rates?
Per diem (“per day”) rates are the daily allowances used to cover travel costs like meals, lodging, and incidental expenses when someone is away from their usual work location. Instead of itemizing every receipt, the traveler (or employer) uses a fixed daily amount—simplifying reimbursement, improving consistency, and speeding up accounting.
Per diem rates 2025
The U.S. federal “standard CONUS” (contiguous U.S.) per diem rates for FY2025 are below. Note: many localities have higher non-standard rates.
| Expense | Standard Rate (FY2025) | Example of Higher-Cost Areas* | Example of Lower-Cost Areas* |
|---|---|---|---|
| Lodging | $110 | $200+ (major metros) | $75+ (some rural areas) |
| Meals & Incidental Expenses (M&IE) | $68 | $90+ (high-cost localities) | $50+ (some rural areas) |
| Total (standard) | $178 | $290+ | $125+ |
*Illustrative ranges. Actual locality rates vary by city/county and change annually.
Per diem rates 2024 vs 2025
| Expense | 2024 Standard | 2025 Standard | Change |
|---|---|---|---|
| Lodging | $107 | $110 | +$3 |
| M&IE | $59 | $68 | +$9 |
| Total | $166 | $178 | +$12 |
How per diem operates
1) How rates are set
Per diem rates are usually set by governments or organizations and differ by location and trip purpose. In the U.S., federal travel inside the contiguous states uses the GSA’s CONUS rates; Alaska, Hawaii, and U.S. territories use DoD rates; international trips use State Department rates. Many private employers adopt these benchmarks in their own policies.
2) What the per diem covers
- Meals: breakfast, lunch, dinner, and related taxes/tips
- Lodging: hotel or other approved accommodations
- Incidentals: small expenses like tips to baggage handlers, etc.
3) Reimbursement in practice
Most policies simply multiply the daily rate by eligible travel days. Often, receipts for meals are not required when using per diem (lodging rules vary by policy). Travelers must still document the business purpose, destination, and dates.
4) Unused per diem
Some employers let travelers keep unspent per diem; others require returning the excess. Always follow your company’s written policy.
5) Recordkeeping & approvals
- Track basics: purpose, dates, destination(s), and any costs outside per diem (e.g., airfare, mileage)
- Submit on time: use your finance/HR workflow or expense tool
- Approvals: finance/HR reviews for policy compliance before reimbursement
Calculating per diem
- Confirm purpose: business, government, medical, etc., as rules vary.
- Identify location: per diem is locality-based.
- Separate components: lodging vs. M&IE (meals + incidentals).
- Look up the rate: use official tables or your company policy.
- Multiply by days: nights for lodging; calendar days for M&IE.
Partial days: Many policies reduce M&IE on the first/last travel day (e.g., 75%). Check your policy.
Tips for business travelers
- Plan ahead: know your destination’s rate and daily budget.
- Keep receipts anyway: even if not required for meals, they can help resolve questions.
- Mind the limits: stay within your lodging cap and M&IE.
- Pick cost-efficient options: stretch your allowance sensibly.
- Watch for updates: rates change annually.
Guidance for employers & organizations
Reimbursing correctly
Align your policy to recognized benchmarks (e.g., GSA/DoD/State) and make the claim steps crystal clear. State whether you use per diem or actuals, how first/last day M&IE is handled, and what documentation is required.
Controlling the travel budget
- Pre-trip planning: encourage early booking to reduce lodging costs.
- Use tech: real-time expense tracking and policy rules in your software.
- Preferred vendors: negotiate hotel/meal discounts.
- Tiered rates: match allowances to low/high-cost destinations.
- Audit regularly: spot trends and update policy as needed.
Is per diem taxable?
In the U.S., per diem paid under an accountable plan and at or below the applicable federal rates is generally non-taxable to the employee. Excess amounts (or non-business use) are typically taxable. Your policy should define substantiation rules and timing for submissions.
Common challenges & how to handle them
- Mismatched costs: Create higher tiers for high-cost cities or allow actuals for long assignments.
- Fairness vs. simplicity: Consider a hybrid (per diem for meals, actuals for lodging) where appropriate.
- Communication: Provide examples, FAQs, and quick calculators so travelers know what to expect.
Software solutions for centralized expense management
- Expensify – receipt scanning, rules, approvals
- SAP Concur – enterprise-grade T&E automation
- Zoho Expense – SMB-friendly with accounting integrations
- Certify – automated reports and policy enforcement
- QuickBooks Online – integrated expense + accounting
