· ShiftFlow Editorial Team · Glossary · 8 min read
What Are Per Diem Rates? Definition, Examples & Guide (2025)
Learn 2025 federal per diem rates for lodging and meals, how GSA determines reimbursement amounts, per diem vs actual expense reporting, state and international rates, and best practices for managing employee travel reimbursements.
What Are Per Diem Rates?
Per diem rates are daily allowances established by the federal government or employers to reimburse employees for lodging, meals, and incidental expenses (M&IE) during business travel. If you’re planning business travel or managing expense policies, per diem simplifies expense reporting by providing fixed daily rates based on travel location rather than requiring detailed receipts for every meal and minor expense.
For fiscal year 2025, the standard CONUS rate is $166 per day ($107 lodging, $59 M&IE). High-cost cities like New York, San Francisco, and Washington DC range up to $535+ per day depending on location.
The U.S. General Services Administration (GSA) sets federal per diem rates annually for government employees, and many private employers adopt these rates for their own travel expense policies. According to the IRS Publication 463, per diem reimbursements up to federal rates are tax-free for employees when properly documented.
What Are the 2025 Federal Per Diem Rates?
Standard CONUS Rates (FY 2025)
- Lodging: $107 per night
- M&IE (Meals & Incidental Expenses): $59 per day
- Total Standard Rate: $166 per day
The standard rate applies to most continental U.S. locations not designated as non-standard areas.
Non-Standard Area Rates
High-cost locations have elevated rates. Major city examples for FY 2025:
| City | Lodging | M&IE | Total |
|---|---|---|---|
| New York City, NY | $296 | $79 | $375 |
| San Francisco, CA | $312 | $79 | $391 |
| Washington, DC | $252 | $79 | $331 |
| Boston, MA | $280 | $79 | $359 |
| Los Angeles, CA | $228 | $74 | $302 |
| Chicago, IL | $231 | $79 | $310 |
| Seattle, WA | $221 | $79 | $300 |
Seasonal Variations: Some locations have seasonal rates reflecting tourism patterns—ski resort areas (higher in winter), beach destinations (higher in summer), and conference cities (higher during major events). Always check current GSA rates for specific travel dates.
Alaska, Hawaii, and Territories
- Alaska: $166–$400+
- Hawaii: $285–$385
- Puerto Rico: $174–$256
- Guam: $205
- U.S. Virgin Islands: $190–$210
International Rates
The State Department establishes international per diem rates, generally higher than domestic. Examples: London UK ($555), Tokyo Japan ($458), Paris France ($506), Dubai UAE ($396), Toronto Canada ($320). Check the State Department’s DSSR for current rates.
How Is Per Diem Calculated?
Full Day Travel
Full per diem applies for each complete 24-hour period. Calculation: Daily rate × number of full days.
Example: 3 full days in Chicago at $310/day = $930 per diem
Partial Day Travel
First and Last Days: Most policies provide 75% of the M&IE rate for travel days (arrival and departure).
Lodging: Actual nights stayed, not arrival/departure days.
Example: 3-day Chicago trip ($231 lodging, $79 M&IE)
- Monday (travel): $0 lodging, $59.25 M&IE (75% of $79)
- Tuesday (full): $231 lodging, $79 M&IE
- Wednesday (full): $231 lodging, $79 M&IE
- Thursday (return): $0 lodging, $59.25 M&IE (75% of $79)
- Total: $462 lodging, $276.50 M&IE = $738.50
Meals Provided
When meals are provided (conferences, client meetings), deduct meal portions: Breakfast (15–25% of M&IE), Lunch (25–35%), Dinner (40–50%).
Example: $79 M&IE with lunch provided → Lunch portion ~$24 (30%) → Adjusted M&IE: $55 for that day.
Per Diem Components Explained
Lodging
What It Covers: Hotel, motel, or other temporary accommodations.
Reimbursement Approaches: Most common is actual cost up to per diem maximum. Lodging typically requires receipts even under per diem. Extended stays (30+ days) may require actual expense reporting.
Meals and Incidental Expenses (M&IE)
Meals: Breakfast, lunch, dinner, and reasonable tips for food service.
Incidentals: Tips for porters and hotel staff, laundry (on trips of 4+ nights), minor personal expenses related to travel.
Not Included: Transportation, business expenses (printing, shipping), entertainment or alcohol (unless part of a meal), personal expenses unrelated to travel.
Incidentals-Only Per Diem
For local travel or day trips without overnight stays: $5 per day for tips and minor expenses during same-day business travel.
Per Diem vs Actual Expense Reimbursement
| Aspect | Per Diem | Actual Expense |
|---|---|---|
| Receipt Requirements | Minimal (usually just lodging) | Detailed receipts for everything |
| Flexibility | Keep savings if spend less | Reimbursed only for actual costs |
| Administrative Burden | Low (simple daily rate) | High (review all receipts) |
| Cost Control | Capped at daily maximum | Can exceed budget |
| Tax Treatment | Non-taxable up to federal rates | Non-taxable if documented |
| Best For | Routine travel, short trips | Extended stays, unusual trips |
Use Per Diem for routine business travel to standard locations, short trips (1–14 days), and simplifying expense reporting.
Use Actual Expense for extended stays (30+ days), unusual travel situations not well-covered by standard rates, or international travel where per diem rates are not available.
Tax Treatment of Per Diem
For Employees
Non-Taxable: Per diem reimbursements up to federal rates are not taxable income and do not appear on W-2 forms.
Taxable Excess: Reimbursements exceeding federal rates are taxable wages reported on W-2.
Accountable Plans: To receive tax-free per diem, employer plans must have business connection (travel is business-related), substantiation (document dates, locations, business purpose), and return excess (unused per diem or overpayments must be returned).
For Employers
Deductible Expense: Per diem payments are deductible business expenses if properly documented.
No Payroll Taxes: Accountable plan per diem up to federal rates is not subject to income tax withholding, Social Security, or Medicare taxes.
Reporting: Excess per diem over federal rates must be reported as wages on W-2 with appropriate tax withholding.
State-Specific Per Diem Considerations
Some states allow higher per diem rates for state employee travel: California (state rates often exceed federal for in-state travel), New York (higher rates for NYC area), Massachusetts (elevated rates for Boston metro), and Washington (higher Seattle region rates).
Private employers can choose to follow federal or state rates, but using federal rates provides clearest tax treatment.
State-Specific Rules: California has strict meal and rest break laws even during business travel. New York has expense reimbursement timing requirements. Illinois has specific documentation requirements for expense deductions.
Best Practices for Managing Per Diem
For Employers
Adopt Clear Policies: Document whether you use federal GSA rates, custom rates, or actual expense reimbursement.
Specify Components: Clarify whether lodging is actual-cost-up-to-per-diem or fixed amount.
Define Partial Day Treatment: Specify first/last day percentages (commonly 75% of M&IE).
Meal Provision Rules: Establish clear deductions when meals are provided.
Timely Reimbursement: Process per diem payments within 30 days of travel expense report submission.
Track Compliance: Monitor that reimbursements don’t exceed federal rates to maintain tax-free status.
Use Software: Implement expense management tools integrated with current GSA rate databases.
For Employees
Know Your Rate: Check GSA rates for your destination before travel at www.gsa.gov/perdiem.
Document Travel: Keep records of travel dates, locations, and business purpose.
Return Unused Per Diem: If travel is canceled or shortened, promptly return unearned per diem.
Save Lodging Receipts: Most policies require lodging receipts even under per diem systems.
Submit Timely: File expense reports within company deadlines (commonly 30–60 days after travel).
Updates and Resources
Annual Updates: GSA publishes new rates annually, effective October 1. Rates are announced in August–September. Mid-year changes are rare but possible.
How Rates Are Determined: Lodging rates are based on hotel surveys. M&IE rates reflect meal costs and incidentals, adjusted for regional differences.
Finding Current Rates:
- GSA Per Diem Lookup: www.gsa.gov/travel/plan-book/per-diem-rates
- State Department DSSR: aoprals.state.gov/web920/per_diem.asp (international)
- GSA mobile apps or expense management platforms
When Should You Use Per Diem?
✅ Great if:
- You want to simplify expense reporting without meal receipts
- Business travel is routine and to standard locations
- Trips are short-term (1–14 days)
- You need clear cost control with fixed daily maximums
⚠️ Risky if:
- Extended stays (30+ days) make actual expenses more appropriate
- Reimbursements exceed federal rates (becomes taxable income)
- Employees don’t return per diem for unused travel days
- You don’t maintain documentation of dates, locations, and business purpose
The Bottom Line
Per diem rates for 2025 provide location-based daily allowances for business travel expenses. The standard CONUS rate is $166 per day ($107 lodging, $59 M&IE), with higher rates for major cities and seasonal destinations up to $535+ per day.
Per diem simplifies expense reporting by eliminating detailed meal receipts, provides flexibility for travelers to manage spending, and offers clear cost control for employers. Reimbursements up to federal rates are tax-free for employees when proper documentation is maintained.
Employers and employees should reference current GSA rates for domestic travel and State Department rates for international travel to ensure compliance and proper reimbursement. Clear policies, timely processing, and integrated expense management software improve per diem administration.
Try ShiftFlow’s workforce management platform featuring integrated expense reporting and compliance tools to streamline travel expense management and per diem tracking.
Sources
- U.S. General Services Administration (GSA), FY 2025 Per Diem Rates
- U.S. Department of State, Standardized Regulations (DSSR) for international per diem
- IRS Publication 463, Travel, Gift, and Car Expenses (accountable plan requirements)
- Society for Human Resource Management (SHRM), per diem policy best practices
Further Reading
- PRN Employee Guide – As-needed healthcare staffing
- Full-Time Job Benefits – Employment status and compensation
- 2nd Shift Guide – Evening shift operations
Frequently Asked Questions
What are per diem rates for 2025?
For fiscal year 2025, the standard CONUS per diem rate is $166 total ($107 lodging, $59 M&IE). High-cost areas like New York City ($375), San Francisco ($391), and Washington DC ($331) have higher rates ranging from $174 to $535+ total per day depending on location. Check GSA.gov for specific rates by destination and travel dates.
How is per diem calculated?
Per diem is calculated based on travel destination and dates. Full per diem applies for each full day of travel. First and last travel days typically receive 75% of M&IE while lodging is reimbursed for actual nights stayed. Multiply the daily rate by travel days, applying appropriate percentages for partial days and deducting meal portions when meals are provided.
What does per diem cover?
Per diem covers lodging (hotel costs) and meals & incidental expenses including breakfast, lunch, dinner, tips for food service and porters, and minor expenses like laundry on trips of 4+ nights. It does not cover transportation, rental cars, parking, business expenses like printing, entertainment, or personal expenses unrelated to travel.
Is per diem taxable income?
Per diem reimbursements up to federal GSA rates are not taxable income and do not appear on W-2 forms when provided through accountable plans. Reimbursements exceeding federal rates are taxable as wages. Employees must return per diem for unused travel days to maintain tax-free status.
