Travel Expense: Understanding Standard Allowance And Reimbursement

Per diem rates are a fixed amount paid to employees to compensate for lodging, meals, and incidental expenses incurred when traveling on business rather than using actual expenses. The Internal Revenue Service (IRS) allows the use of per diem rates to make reimbursements easier for employers and employees. Per diem rates are a fixed amount paid to employees to compensate for lodging, meals, and incidental expenses incurred when traveling on business rather than using actual expenses. Per diem typically covers the following areas of an employee’s travel expenses:

- Lodging: Overnight stays in hotels, motels, apartments, rental homes, etc.

- Meals: Breakfast, lunch, and dinner

- Incidentals: Room service, dry cleaning, tips for food servers and luggage carriers, etc.

The standard per diem rate for the cost of operating your car for business use is 65.5 cents ($0.655) per mile. The standard per diem rate for areas outside the continental United States is set by the Department of Defense. The standard per diem rate for all other foreign areas is set by the State Department.

Per diem rates for the continental United States

Per diem rates are the amounts each traveler is allowed to spend for lodging, meals, and incidentals while on official travel. Per diem is not authorized for local travel (within 50 miles of the duty location). The General Services Administration (GSA) establishes the rates that federal agencies use to reimburse their employees for lodging and meals and incidental expenses incurred while on official travel within the continental United States (CONUS). A standard rate applies to most of CONUS. Individual rates apply to about 300 non-standard areas (NSAs). Most NSAs are a key city/primary destination and the surrounding county.

The CONUS per diem reimbursement rates prescribed in Bulletin 23-01 may be found on the GSA website. GSA bases the maximum lodging allowance rates on the average daily rate, a widely accepted lodging industry measure, less five percent. If a maximum lodging allowance rate and/or a meals and incidental expenses (M&IE) per diem reimbursement rate is insufficient to meet necessary expenses in any given CONUS location, federal executive agencies can request that GSA review that location. The Federal Travel Regulation (FTR) allows for actual expense reimbursement as provided in §§ 301-11.300 through 301-11.306.

For FY 2023, no new non-standard area locations were added. Maximum lodging allowance rates in some existing per diem localities will increase and the standard CONUS lodging rate will increase from $96 to $98. The M&IE per diem tiers for FY 2023 are unchanged at $59-$79, with the standard M&IE rate unchanged at $59.

Per diem rates for Alaska, Hawaii, Puerto Rico and Guam

Per diem rates for Alaska, Hawaii, Puerto Rico, and Guam are set by the Department of Defense. The rates are used to reimburse federal employees for lodging, meals, and incidental expenses incurred while on official travel. The rates vary depending on the location and are typically announced in mid-August for the upcoming federal fiscal year. The rates for the fiscal year 2025 are available on the U.S. General Services Administration (GSA) website.

For Alaska, the per diem rates cover various locations, including Anchorage, Denali National Park, Dutch Harbor-Unalaska, Eielson Air Force Base, and Fairbanks. The rates for Hawaii cover locations such as Hilo, Honolulu, Kahului, Kailua-Kona, and Lihue.

For Puerto Rico, the per diem rates cover locations like Fajardo, Fort Buchanan, Isla Verde, and San Juan. And for Guam, the rates cover locations like Andersen Air Force Base, Naval Base Guam, and Tumon.

The per diem rates for these areas are typically higher than the standard CONUS rates due to the higher costs of living and travel in these regions. The rates are important for federal employees and contractors who travel to these areas for official business. By using the per diem rates, they can ensure they are reimbursed appropriately for their travel expenses.

Per diem rates for foreign countries

The rates for lodging and meals plus incidental travel expenses (M&IE) are reported separately, followed by a combined daily rate. The breakdown of rates by meals and incidentals is found in the Federal Travel Regulation (FTR) established by the General Services Administration and implementing regulations established by Federal Agencies.

The maximum lodging amount is intended to cover the cost of lodging at adequate, suitable, and moderately-priced facilities. The M&IE portion is intended to cover the cost of meals and incidental travel expenses such as laundry and dry cleaning. The maximum per diem rates for foreign countries are based on costs reported in the Hotel and Restaurant Survey (Form DS-2026) submitted by US government posts in foreign areas. This report includes prices for hotel rooms and meals at facilities representative of moderately priced and suitable hotels and restaurants most frequently used by typical Federal travellers.

The Department of Defense establishes per diem rates for Alaska, Hawaii, Puerto Rico, American Samoa, Guam, Midway, the Northern Mariana Islands, the U.S. Virgin Islands, Wake Island, and other non-foreign areas outside the continental United States.

Standard per diem rate

Per diem rates are the amounts each traveller is allowed to spend on lodging, meals, and incidental expenses (M&IE) while on official travel. The General Services Administration (GSA) establishes the rates that federal agencies use to reimburse their employees for these expenses while on official travel within the continental United States (CONUS). A standard rate applies to most of CONUS, while individual rates apply to about 300 non-standard areas (NSAs).

The GSA typically announces the rates for the coming federal government fiscal year in mid-August. The rates for foreign countries are set by the State Department, while the rates for Alaska, Hawaii, U.S. Territories and Possessions are set by the Department of Defense.

The GSA website provides a search function to find the per diem rate by city, state, or zip code.

Calculating total per diem by trip

The per diem rate is the daily allowance that employees can claim for travel expenses, including meals, lodging, and incidental costs. The per diem rate is set by the U.S. General Services Administration (GSA) and is used by federal agencies to reimburse their employees for travel expenses. The GSA establishes a standard rate that applies to most areas within the continental U.S. (CONUS), as well as individual rates for about 300 non-standard areas (NSAs). The rates for the upcoming fiscal year are typically announced in mid-August.

To calculate the total per diem for a trip, you need to determine the per diem rate for the specific location and the number of days spent on the trip. Here are the steps to calculate the total per diem by trip:

• Determine the per diem rate for the travel destination: You can search for the per diem rate by city, state, or ZIP code on the GSA website. The GSA provides rates for both CONUS and non-CONUS locations.
• Count the number of travel days: Calculate the total number of days spent on the trip, including the days of departure and return. Remember to count partial days as well.
• Multiply the per diem rate by the number of travel days: This will give you the total per diem amount for the trip. For example, if the per diem rate for a location is $100 and the trip lasts for 5 days, the total per diem would be $500 ($100 x 5 days).
• Consider any applicable meal or incidental expense adjustments: In some cases, you may need to adjust the per diem rate to account for meals or incidental expenses. For example, if meals are provided during the trip, you may need to subtract the cost of meals from the per diem rate.
• Apply any applicable tax exemptions: In certain cases, there may be tax exemptions for lodging or other travel expenses. Be sure to review the applicable tax rules for the location and your specific situation.
• Calculate the total per diem for the trip: Multiply the adjusted per diem rate by the number of travel days to get the total per diem amount for the trip.

Remember that per diem rates can vary depending on the location and the time of travel. It is essential to refer to the most up-to-date per diem rates provided by the GSA when calculating the total per diem for a trip. Additionally, it's important to keep accurate records of travel expenses and to understand the tax implications of per diem reimbursements.

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