16/10/2026
U.S. Per Diem Standards for Business Travel Reimbursement
Managing employee travel expense reimbursements can be relatively complex, and companies often face practical challenges in establishing a process that is both standardized and efficient. Common questions include whether providing employees with travel allowances is compliant, whether expenses can be reimbursed when an employee is unable to provide receipts but has proof of payment, and why certain expenses personally incurred by a company’s controlling shareholder or owner cannot simply be treated as reimbursable business expenses and recorded as company expenses.
Under the U.S. tax system, the Internal Revenue Service (IRS) allows companies to use a per diem system to simplify the process of reimbursing employee travel expenses. This article provides an overview of the U.S. employee travel reimbursement per diem standards.
1. What Is Per Diem?
A U.S. per diem allowance is an amount paid to employees to cover lodging, meals, and incidental expenses incurred during business travel. The allowance is generally paid on a daily basis according to established rates and is not treated as an additional benefit or supplemental allowance. Employees are generally not required to submit individual receipts for expenses covered by the per diem; however, they must still provide travel documentation, as required by the company, substantiating the dates, location, and business purpose of the trip in order to satisfy the IRS substantiation requirements applicable to an Accountable Plan.
When a company adopts a per diem reimbursement method, employees generally may not separately claim reimbursement for actual travel expenses that are already covered by the per diem allowance for the same travel period, in order to avoid duplicate reimbursement.
2. What Expenses Are Covered Under Per Diem Standards?
Per diem rates generally fall into the following two categories:
(1) Combined Lodging, Meals, and Incidental Expenses Standard (hereinafter referred to as the Combined Per Diem Standard)
(2) Meals and Incidental Expenses Only Standard (hereinafter referred to as the M&IE Per Diem Standard)
Lodging expenses refer only to the actual cost of accommodations and do not include other charges, such as room taxes or energy surcharges. Meals and incidental expenses (M&IE) include the cost of meals and other incidental expenses, such as room service, laundry, dry cleaning, and pressing, as well as tips paid to service personnel, including restaurant servers and baggage handlers.
When reimbursing employees for business travel expenses, a company may choose to use either type of per diem method. However, self-employed individuals may use only the Meals and Incidental Expenses (M&IE) rate and are not eligible to use the first method, which combines lodging and M&IE into a single per diem rate.
3. How to Properly Apply Per Diem Standards
(1) Compliance With IRS Accountable Plan Requirements
(a) Reimbursed expenses must be directly related to company business and limited to necessary expenses incurred during business travel
Employee travel expenses must be directly connected with business activities and incurred for legitimate business purposes. Personal or non-business expenses incurred during an employee’s travel period are not reimbursable. For example, if an employee extends their stay after completing business activities for personal reasons, any expenses incurred during the extended period, including but not limited to lodging, meals, transportation, and related incidental costs, are not eligible for reimbursement and must be paid personally by the employee.
(b) Adequate documentation must be provided
Under a per diem reimbursement arrangement, employees are generally not required to provide receipts for each individual expense. However, employees must still provide travel expense reports documenting relevant information, including but not limited to the business purpose of the trip; specific travel dates and locations; supporting documentation demonstrating the business nature of the travel; lodging records or lodging receipts (if only using the M&IE per diem standard). Self-employed individuals should also maintain similar travel documentation.
Employees must submit their travel substantiation reports to the company within a reasonable period of time, generally within 60 days after the expenses are incurred.
(c) Unused amounts or excess payments must be returned to the company
Any unused per diem amounts or amounts exceeding the applicable standard or approved reimbursement limit are considered non-reimbursable amounts and must be returned to the company within a reasonable period of time.
If a company’s travel reimbursement arrangement fails to satisfy all three core requirements above, the reimbursement arrangement may be treated as a Nonaccountable Plan.
Under IRS rules, amounts paid under a nonaccountable plan may be treated as employee wages and must be included on the employee’s Form W-2. In such cases, the employee may be subject to applicable individual income tax, as well as employee portions of Social Security and Medicare taxes. The company must also fulfill related employer payroll tax obligations, including employer portions of Social Security and Medicare taxes and federal unemployment tax obligations.
(2) Specific Per Diem Rates
Currently, both the IRS and the U.S. General Services Administration (GSA) publish per diem reimbursement standards for business travel. These two systems differ in their application methods and rate structures. U.S. companies may select the appropriate method based on their business operations and travel management requirements.
(a) IRS High-Low Substantiation Method Per Diem Rates
The IRS allows companies to use the High-Low Substantiation Method as a simplified method for calculating employee business travel per diem allowances.
Under this method, companies do not need to determine the specific per diem rate for every individual travel location. Instead, the IRS establishes two categories: High-cost localities; and
All other localities. Different daily rates apply depending on the category.
According to the latest IRS guidance under Notice 2025-54, for travel expenses paid or incurred beginning October 1, 2025, the following rates may apply:
See the figure:
*The specific list of high-cost localities is determined annually by the IRS. Companies should refer to the relevant IRS guidance to confirm applicable locations.
(b) GSA Locality-Based Per Diem Rates
Unlike the IRS High-Low Method, the GSA per diem system provides more detailed rates based on specific geographic locations within the continental United States (CONUS, including the 48 contiguous states and the District of Columbia). Companies may visit the GSA website: https://www.gsa.gov/travel/plan-a-trip/per-diem-rates/faqs, and search for the applicable per diem rates by entering the specific city or county where the employee is traveling. For locations not specifically listed in the GSA rate table, companies may apply the standard CONUS rates: Lodging per diem: $110 per day; M&IE per diem: $68 per day
(c) Regardless of whether a company applies the IRS High-Low Method or GSA locality-based per diem rates, the amount paid to employees must be equal to or less than the applicable standard. Any amount exceeding the applicable limit must be treated in accordance with applicable tax rules.
(3) How to Calculate Per Diem Rates
When calculating employee travel per diem payments, companies cannot simply apply the same daily rate for every travel day. Under IRS rules, the M&IE portion of the per diem allowance for the first and last day of travel is limited to 75% of the applicable daily rate. Full travel days in between are reimbursed at 100% of the applicable rate.
Assume a company uses the Combined Per Diem Standard and applies the IRS High-Low Method. Employee A travels to Los Angeles, California from November 3, 2025, through November 6, 2025, to attend a trade exhibition. On November 26, 2025, Employee A submits a travel expense report in accordance with the company’s Accountable Plan requirements, including documentation supporting the travel dates, location, and business purpose.
According to the latest IRS High-Low Method rates, Los Angeles qualifies as a high-cost locality. The applicable rates are: Combined Per Diem Standard: $319/day; M&IE Per Diem Standard: $86/day. Employee A receives a total per diem allowance of $1,000. The calculation is as follows:
See the figure:
参考信息:
https://www.irs.gov/pub/irs-drop/n-25-54.pdf
https://www.gsa.gov/travel/plan-a-trip/per-diem-rates/faqs
https://www.irs.gov/pub/irs-regs/perdiemfaq%26a.prn.pdf
https://www.irs.gov/publications/p15
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