When you have typed in per diem rates, chances are that you are one of three individuals: an employee seeking to know how much you should be paid per day on an impending trip, a manager or a lead in the finance department seeking the correct rate before granting travel, or a travel expense policy maker starting with a blank sheet of paper.
This guide addresses all three scenarios. Per diem rates are the daily allowances that are used to reimburse employees on business trips for meals, lodging and incidentals. Plus, knowing the correct rate for the correct destination is the difference between a clean reimbursement and an IRS compliance nightmare.
We are going to go through who fixes domestic and international rates, how to find them and how to figure out the precise per diem on any trip.
If you’re new to what per diem means as a concept, our complete guide to what per diem is and how it works is a good starting point before continuing here.
What Are Per Diem Rates?
Per diem rates are the predetermined daily allowances that will be utilized to compensate the employees for the expenses incurred when travelling on business. Instead of making employees turn in each receipt, a per diem rate imposes a limit on how much of the money an employee can spend each day; the employee spends the money, submits a short expense statement, and receives a refund without the paperwork of itemized claims.
There are three types of expenses that are subject to per diem rates:
- Lodging: Reimbursed at actual cost to the maximum per day at that place. If the hotel is below the cap, the employee is reimbursed for what they paid.
- Meals and incidental expenses (M&IE): This is a fixed amount of money that the employee is paid per day, whether they consume food or not. Incidentals: Laundry, small service charges, and tips are added to this figure.
- Combined rates: Some companies offer a single combined rate that includes accommodation and meals. This is permitted by the IRS as the high-low substantiation method, which we will discuss further.
Who sets per diem rates in the US?
There are three governing bodies depending on where the travel occurs:
| Travel Type | Governing Body | Rate Source |
| Continental US (CONUS) | General Services Administration (GSA) | gsa.gov |
| US territories, Alaska, Hawaii (OCONUS) | Department of Defense | travel.dod.mil |
| International/foreign countries | US Department of State | allowances.state.gov |
This distinction matters more than most travel policies acknowledge. If your company references “GSA rates” for all travel, including international, your policy has a factual error that creates compliance risk. The GSA only covers continental US travel.
What do per diem rates actually pay for?
Per diem rates cover meals, lodging, and incidentals. They do not cover transportation; flights, rental cars, mileage, and transit are handled separately. Per diem also doesn’t cover alcohol, personal entertainment, or non-business spending.
What Are the 2026 GSA Per Diem Rates?
The GSA publishes updated per diem rates each year, effective October 1, covering every county in the continental United States. Private companies aren’t legally required to follow these rates, but most use them as their baseline because doing so keeps reimbursements tax-compliant without any additional IRS documentation.
The 2026 standard CONUS per diem rate is $178/day, broken down as:
- Lodging: $110/night
- M&IE: $68/day
This standard rate applies to the majority of US locations; roughly 2,600 counties. Cities with higher costs of living receive their own “non-standard area” (NSA) rates. There are currently over 296 NSAs with rates above the $178 baseline.
What cities have higher-than-standard per diem rates?
Major business travel destinations typically sit well above the standard rate. A few examples:
- Washington DC has one of the highest lodging allowances in the country, reflecting the high cost of hotels near government buildings and conference centers. For a full breakdown of the current Washington DC per diem rates and how they apply by season, the monthly rate variations there are significant enough to plan around.
- San Diego also sits above the national standard for most of the year, with rates that shift month to month. For employees traveling to San Diego for conferences or client meetings, the monthly GSA rate is worth checking ahead of booking.
- New York City, San Francisco, Boston, and Chicago consistently rank among the highest-rate cities in the country under both the GSA city-specific system and the IRS high-low method.
How do you find the GSA per diem rate for a specific city?
Go to gsa.gov/travel/plan-a-trip/per-diem-rates and enter the city name, state, or ZIP code. The lookup returns:
- The lodging maximum for each month of the fiscal year (October–September)
- The flat M&IE rate
Always check the rate for the specific month of travel. Lodging caps in NSA cities often change month to month; the rate in February may be different from the rate in July for the same city.
What Are International Per Diem Rates?
When employees travel outside the US, domestic GSA rates no longer apply. International per diem rates are set by an entirely different agency, the US Department of State’s Office of Allowances, and they operate under different rules.
The key differences:
- Update frequency: State Department rates update monthly. GSA domestic rates update once a year. This means the international rates you used last quarter may no longer be accurate.
- Source: Rates are published at allowances.state.gov and are searchable by country and city.
- Rate structure: International rates include a maximum lodging amount and a separate M&IE figure, similar to domestic rates, but the dollar amounts often differ significantly from CONUS benchmarks.
Who sets international per diem rates, and why does it matter?
The US Department of State, not the GSA. This is the most common error in corporate travel policies. If your policy document says the GSA sets international rates, it needs to be corrected.
The State Department surveys lodging and meal costs at each location and publishes rates in USD. These update on the first of each month, which is why travel managers who hardcode specific international rate figures into policy documents quickly find those numbers out of date.
How are international rates different from domestic GSA rates in practice?
Several ways that matter operationally:
- Currency: State Department rates are published in USD, but employees spend in local currency. Your policy should specify which exchange rate applies: transaction date, monthly average, or corporate card rate; before the first international trip, not after a dispute.
- Monthly updates: Because international rates change monthly, the correct approach is to reference allowances.state.gov as your policy’s source of record rather than publishing specific dollar figures. Employees look up the current rate at booking time.
- Multi-country trips: For trips that cross multiple countries, the per diem rate for each day is determined by where the employee slept that night, not a blended or averaged figure.
- The first and last day rule still applies: The 75% M&IE rule on travel days applies to international trips exactly as it does domestically.
For a dedicated deep dive on international rates by destination and how to handle the edge cases, our guide to international per diem rates covers the State Department rate structure in full.
How Are Per Diem Rates Determined?
Rates aren’t arbitrary. The GSA and the State Department both survey the actual business travel costs when determining the rates. The drivers of the variation at the locations:
- Local lodging market statistics: The GSA and State Department survey mid-range business hotels in every location. Cities with a low hotel supply, high year-round demand, or high corporate travel volume require greater lodging capacity.
- Meal expenses: Restaurant expenses, tipping standards, and local food expenses are inputs to M&IE expenses.
- Seasonality: Destinations with high seasonal demand; beach cities, ski resorts, and large conference destinations, can have their lodging rates increased in times of high season.
- Economics: Inflation, domestic cost of living adjustments ,and in the case of international rates, currency fluctuations may cause rate adjustments.
Why do per diem rates vary so much between cities?
The difference between the standard $178/day rate and New York’s rate isn’t bureaucratic; it reflects real differences in what a mid-range hotel actually costs in each market. A $110/night lodging cap is entirely reasonable in most of rural America. It would leave a business traveler sleeping outside in Manhattan.
This is also why the high-low method exists: rather than making every small company look up city-by-city rates, the IRS allows a two-tier system (high-cost vs. standard) that covers the real variation without the lookup burden.
How often do per diem rates change?
- GSA domestic rates: Updated annually, effective October 1. Rates are generally stable within a fiscal year.
- State Department international rates: Updated monthly. High-inflation markets or countries with significant currency movement may see more frequent revisions.
- IRS high-low rates: Updated annually alongside the GSA schedule.
How Do You Calculate Per Diem Rates for a Business Trip?
Here’s a step-by-step calculation for a real scenario. An employee travels to Seattle, Washington, in May for 4 days.
Step 1: Look up the rate. At gsa.gov, Seattle in May shows: Lodging $232/night, M&IE $79/day.
Step 2: Apply the first and last day rule. First and last day M&IE = $79 × 75% = $59.25.
Step 3: Calculate each day.
| Day | Lodging | M&IE | Total |
| Day 1: arrival | $232 | $59.25 | $291.25 |
| Day 2 | $232 | $79.00 | $311.00 |
| Day 3 | $232 | $79.00 | $311.00 |
| Day 4: departure | $0 | $59.25 | $59.25 |
Total: $972.50
Note: lodging is reimbursed at actual cost up to the cap. If the employee booked a hotel at $180 instead of $232, they get back $180, not $232.
What is the high-low per diem method?
The IRS high-low method replaces city-specific lookups with two flat rates for all CONUS travel. For 2025-2026:
- High-cost areas: $319/day ($233 lodging + $86 M&IE)
- All other areas: $225/day ($151 lodging + $74 M&IE)
High-cost designations include major cities like New York, San Francisco, Boston, Chicago, and others listed in IRS Notice 2025-54. If the destination isn’t on the high-cost list, use the standard rate.
The tradeoff: once you choose the high-low method for a given employee, you must stick with it for all their CONUS travel for the rest of that calendar year. You cannot mix it with city-specific GSA rates for the same employee in the same year.
How does the first and last day rule affect per diem calculations?
The 75% rule applies only to M&IE on travel days, not lodging. Here’s how to think about it:
- Flying out Monday morning and returning Friday evening? Monday and Friday each get 75% of M&IE.
- Flying out Monday, staying through Thursday night, departing Friday? Lodging covers Monday through Thursday nights (4 nights). M&IE is 75% on Monday and Friday, 100% Tuesday through Thursday.
- Overnight flight where you board on Monday and land on Tuesday? Monday’s per diem is domestic (or no lodging), Tuesday’s is the destination rate.
Can a Company Set Its Own Per Diem Rates?
Yes. Federal per diem rates are a benchmark, not a legal floor. Companies can pay above or below the GSA rate, but the choice has different consequences:
- Paying at the GSA rate: Cleanest option from a tax standpoint. Per diem is fully non-taxable for the employee, fully deductible for the company (subject to the 50% meal deduction rule), and requires no additional IRS documentation.
- Paying above the GSA rate: Allowed, but the excess becomes taxable income for the employee and must be processed through payroll as wages. Many companies in high-cost markets do this for senior travelers whose trips consistently push past the standard cap.
- Paying below the GSA rate: Legal, but creates employee relations risk. Employees increasingly know what the federal rate is. A company paying $120/day in a city where the GSA rate is $178 will hear about it; and the explanation becomes hard to defend without a specific business reason.
What happens if employees spend more than their per diem?
The employee absorbs the difference. Per diem is a fixed daily allocation, not a reimbursement guarantee. If your employee wants a nicer dinner or stays at a pricier hotel than the lodging cap, they pay the excess personally unless your company has a specific exception process (many do for conference hotels that exceed the cap or for exceptional circumstances).
How Does ITILITE Make Per Diem Rates Easier to Manage at Scale?
Looking up GSA rates for every trip, applying the right rate for the right month, handling first and last day calculations, and making sure employees know their limits before they book; it’s manageable for one or two trips. For a team that travels regularly, it becomes a recurring source of errors and rework.
ITILITE integrates per diem rate management directly into the booking and approval workflow. When an employee books a trip to San Diego or Washington DC, the system applies the current GSA rate for that city and month automatically. International trips pull from State Department rates. First and last day adjustments happen without anyone doing the math manually.
Finance teams see clean, policy-aligned expense data that feeds directly into your ERP. Employees see their per diem before they travel, not after they’ve submitted a claim and it gets revised. Managers stop approving line items they don’t fully understand.
Per diem rate management shouldn’t require a spreadsheet and three government websites. When it’s built into the system you already use for travel booking, it just works.
Book a demo with an ITILITE product expert and see how per diem rate management looks when it runs without manual effort.
