Per Diem
What does per diem mean?
Per diem is a daily allowance provided to an employee to cover expenses such as meals, lodging or miscellaneous costs when they travel for work purposes. It is either paid in advance or in the form of reimbursement later.
The per diem rate can include both the meal and lodging costs or just meal expenses, a choice that depends on the employer.
What are the per diem rates for 2025?
Here are the per diem rates in 2025 for all the 50 states in the United States of America as per the official website of Federal Pay.
| State | Number Per-Diem Destinations | Average Meals & Incidentals Rate | Average Lodging Rate |
| Alabama | 4 | $75.50 | $133.40 |
| Arizona | 5 | $82.40 | $155.52 |
| Arkansas | 1 | $68.00 | $114.00 |
| California | 32 | $86.00 | $167.52 |
| Colorado | 15 | $85.20 | $174.51 |
| Connecticut | 4 | $83.00 | $134.50 |
| Delaware | 2 | $74.00 | $137.63 |
| District Of Columbia | 1 | $92.00 | $233.67 |
| Florida | 22 | $80.27 | $166.61 |
| Georgia | 6 | $79.00 | $152.56 |
| Idaho | 3 | $80.00 | $199.36 |
| Illinois | 4 | $83.00 | $143.56 |
| Indiana | 3 | $76.00 | $126.33 |
| Iowa | 2 | $80.00 | $118.00 |
| Kansas | 1 | $80.00 | $135.00 |
| Kentucky | 4 | $78.50 | $134.88 |
| Louisiana | 2 | $74.00 | $135.17 |
| Maine | 3 | $86.00 | $161.42 |
| Maryland | 7 | $80.00 | $138.82 |
| Massachusetts | 13 | $84.62 | $175.40 |
| Michigan | 11 | $77.27 | $131.15 |
| Minnesota | 3 | $86.00 | $153.14 |
| Mississippi | 3 | $68.00 | $126.00 |
| Missouri | 2 | $83.00 | $142.50 |
| Montana | 4 | $77.00 | $163.83 |
| Nebraska | 1 | $80.00 | $122.00 |
| Nevada | 2 | $83.00 | $139.96 |
| New Hampshire | 7 | $74.86 | $140.32 |
| New Jersey | 10 | $81.20 | $139.18 |
| New Mexico | 4 | $77.00 | $145.58 |
| New York | 19 | $82.84 | $142.18 |
| North Carolina | 10 | $75.20 | $134.03 |
| Ohio | 6 | $77.00 | $138.17 |
| Oklahoma | 1 | $80.00 | $116.00 |
| Oregon | 7 | $84.29 | $142.35 |
| Pennsylvania | 13 | $77.69 | $130.01 |
| Rhode Island | 2 | $80.00 | $169.79 |
| South Carolina | 4 | $80.00 | $165.38 |
| South Dakota | 3 | $76.00 | $124.67 |
| Tennessee | 5 | $78.80 | $143.43 |
| Texas | 11 | $76.18 | $139.30 |
| Utah | 4 | $83.00 | $184.79 |
| Vermont | 5 | $83.60 | $169.55 |
| Virginia | 9 | $74.67 | $131.20 |
| Washington | 9 | $86.67 | $143.44 |
| West Virginia | 2 | $68.00 | $118.50 |
| Wisconsin | 3 | $80.00 | $127.86 |
| Wyoming | 2 | $83.00 | $214.67 |
What are the types of per diem?
There are three main types of per diem: lodging, meals, and incidental. Per diem reimbursements do not include travel costs or mileage.
When employees have free lodging (such as staying with family), employers can adjust the per diem rate to cover only meals and incidental expenses, reducing the total daily allowance accordingly.
However, keep in mind that whether the incidental costs will be covered by the employer depends on the company policy and should be discussed beforehand.
The per diem expense categories can be explained as:
- Lodging: Covers hotel stays and overnight accommodations during business travel.
- Meal: Compensates employees for food expenses while traveling.
- Incidental: Covers small, miscellaneous costs like tips, dry cleaning, baggage handling, and minor office supplies.
What are the benefits of per diem?
Per diem helps employers cover work-related expenses for their employees and promotes professional development by encouraging traveling for work. There are many benefits of per diem, including:
1. Easy expense management
Per diem ensures employees are not burdened with financial expenses during business travel. The predetermined allowance as per the per diem rate makes reimbursement efficient without the need to track every individual expense.
Such an approach allows the employee to manage their spending better by preventing excess expenditures on accommodations and meals.
2. Supports professional growth
Per diem can be used as a strategic tool for employers to support professional development. Business travels are made accessible for all employees which makes optional training, workshops, and conferences attainable.
3. Provides financial empowerment
In regions with lower wages, per diem payments serve as a critical financial supplement. These allowances can significantly boost employee motivation and help workers manage additional personal expenses.
How is per diem calculated?
Here’s a detailed breakdown used to calculate per diem:
1. Verify eligibility
The travel for which per diem needs to be reimbursed for should meet the organization’s criteria for foreign travel, long duration assignment, etc. It should also align with departmental travel policies.
2. Determine applicable rates
Identify the federal per diem rates for the specific destination and calculate the rates based on total travel hours for the trip to be reimbursed for.
3. Categorize expenses
Consider the per diem categories as per company policy and categorize expenses based on meals, lodging, and incidental expenses. Make sure it aligns with the specific rates provided in the given policy.
4. Calculate maximum reimbursement
When calculating maximum reimbursement, compile the rates for each expense category to determine the total allowable amount. Make sure that the total does not exceed the 100% coverage limit, and remember that lodging taxes may be separately reimbursed.
5. Prepare documentation
Collecting hotel receipts as required by the company policy. Complete the Travel Authorization (TA) document, if there is one, thoroughly. All necessary details related to the travel costs must be accurately recorded. Employees may also request an advance payment which is typically processed around 10 days before the travel date.
6. Submit reimbursement
While submitting the reimbursement, attach all necessary documentation and carefully match the TEM (Travel Expense Management) number to ensure proper tracking.
Most critically, verify that the entire submission complies with both departmental and federal travel reimbursement guidelines.
What are the tax rules for per diems in 2025?
Per diem payments are typically tax-free. However, it is so as long as employees submit detailed expense reports documenting trip dates, locations, and business purposes to maintain this tax-exempt status.
The tax-free benefit applies only when per diem payments do not exceed the GSA’s official rate. Any amount above this threshold is considered taxable wages and subject to standard income tax withholding.
Employees who do not receive reimbursement can claim business travel expenses on Form 2106. This deduction is available only when itemizing deductions and if expenses surpass 2% of their Adjusted Gross Income.