Business travel expenses can quickly become difficult to manage without a clear reimbursement system. That is why many U.S. businesses and government agencies use per diem rates to cover employee travel costs.
The updated Per Diem Rates 2026 help companies reimburse lodging, meals, and incidental expenses during official business trips without tracking every small receipt.
In this guide, you will learn:
- What per diem means
- Latest GSA per diem rates for 2026
- Lodging and meal allowances
- IRS tax rules
- How businesses use per diem
- State and city rate examples
- How to calculate travel reimbursements
What Is Per Diem?
Per diem is a daily allowance paid to employees for business travel expenses. The term comes from Latin and means “per day.”
Instead of reimbursing every individual receipt, employers can provide a fixed daily amount for:
- Hotel stays
- Meals
- Transportation incidentals
- Small travel-related expenses
Per diem rates are commonly used by:
- Government employees
- Contractors
- Business travelers
- Self-employed professionals
- Corporate finance teams
Who Sets Per Diem Rates in 2026?
Several U.S. government agencies publish official travel reimbursement rates.
General Services Administration (GSA)
The GSA sets per diem rates for travel within the continental United States (CONUS).
Department of Defense (DoD)
The DoD manages rates for military travel locations.
U.S. State Department
Handles international per diem rates for foreign travel.
Most businesses in the United States follow GSA rates because they are widely accepted for tax and reimbursement purposes.
Per Diem Rates 2026 Overview
The official 2026 rates vary depending on:
- State
- County
- City
- Season
- Travel demand
High-cost areas such as New York City, San Francisco, and Los Angeles usually have higher daily allowances than smaller cities.
Typical per diem reimbursements include:
| Expense Type | Description |
| Lodging | Hotel or accommodation expenses |
| Meals & Incidental Expenses (M&IE) | Breakfast, lunch, dinner, tips, and small travel expenses |
Standard Federal Per Diem Rate for 2026
For locations without special high-cost adjustments, the standard federal rate generally includes:
- Standard lodging allowance
- Daily meals and incidental expenses (M&IE)
Rates may increase in major business travel destinations where hotel and food costs are higher.
Meals & Incidental Expenses (M&IE)
M&IE covers everyday travel expenses related to meals and minor costs during business trips.
Common covered expenses include:
- Breakfast
- Lunch
- Dinner
- Tips for hotel staff
- Service charges
- Minor travel incidentals
Some cities have significantly higher meal allowances due to increased living costs.
Example of Per Diem Rates by Location
Here are sample examples of how rates may vary across locations:
| City | Lodging Rate | Meals & Incidentals |
| San Francisco | Higher-than-standard | Higher M&IE |
| Los Angeles | Moderate to high | Moderate to high |
| Seattle | Above average | Higher meal allowance |
| Small towns | Standard federal rate | Standard M&IE |
These differences help businesses reimburse employees fairly based on travel destination costs.
How Businesses Use Per Diem Rates
Companies use per diem systems because they simplify expense management.
Benefits of Using Per Diem
- Reduces paperwork
- Speeds up reimbursements
- Simplifies accounting
- Improves tax compliance
- Helps employees estimate travel budgets
Instead of collecting dozens of receipts, employees receive a fixed approved allowance for business travel days.
Are Per Diem Payments Taxable?
In many cases, per diem reimbursements are not taxable if businesses follow IRS accountable plan rules.
To remain tax-free:
- Travel must be business-related
- Employees must document trip dates and locations
- Payments should not exceed federal limits
If reimbursements go above official federal rates, the excess amount may become taxable income.
How to Calculate Per Diem for Business Travel
Businesses usually calculate per diem based on:
- Travel destination
- Number of travel days
- Lodging rate
- Meals & incidental allowance
Simple Example
If an employee travels for 3 days to a high-cost city:
- Lodging allowance × 3 days
- Meals allowance × 3 days
The total becomes the employee’s travel reimbursement amount.
Why Per Diem Rates Matter in 2026
Travel expenses continue to rise in many U.S. cities. Updated per diem rates help businesses:
- Maintain accurate travel budgets
- Stay compliant with IRS rules
- Improve employee reimbursement processes
- Reduce financial reporting errors
Companies that regularly send employees for conferences, client meetings, or remote work assignments rely heavily on updated federal travel rates.
1. What are the Per Diem Rates for 2026?
Per diem rates for 2026 are daily travel reimbursement allowances set by federal agencies for lodging, meals, and incidental expenses during business travel.
2. Who sets federal per diem rates?
The General Services Administration (GSA) sets federal per diem rates for most U.S. travel locations.
3. Are per diem payments taxable?
Per diem payments are usually not taxable if employers follow IRS accountable plan rules and stay within federal limits.
4. What does M&IE mean in per diem?
M&IE stands for Meals and Incidental Expenses, including food, tips, and small travel-related costs.
5. How do I calculate per diem reimbursement?
Per diem reimbursement is calculated using the travel destination, lodging rate, meals allowance, and total travel days.