Per Diem

What is per diem?

Per diem is a daily allowance paid to employees for travel expenses instead of reimbursing actual costs. The IRS publishes per diem rates by location covering lodging, meals, and incidental expenses. Using per diem simplifies expense reporting because employees do not need to save and submit individual meal receipts; the rate substitutes for actual expense substantiation.

IRS per diem rates

The IRS sets high-low simplified rates: a standard rate and a higher rate for designated expensive cities. Rates vary by location and season. Using per diem at or below IRS rates requires no additional substantiation for the expenses it covers. You still need trip purpose, dates, and business destination documentation. Rates above IRS limits require full substantiation for the excess.

Per diem policy considerations

Per diem works well when travel is frequent, and expense reporting creates administrative burden. It eliminates receipt-chasing for meals. However, some employees prefer actual reimbursement when their costs exceed per diem rates. Consider which approach fits your travel patterns and employee preferences. Hybrid approaches are possible for different expense categories.