Please be aware that this resource is informational only, and many external factors, unique to your company might apply.
Each company must make their own decisions about how they meet their tax obligations.

Per diems are an allowance granted to employees by their employers to cover the expenses they incur while on business trips. For an allowance to be granted, the nature of the employee’s expenses must be professional. This covers the following expenses:

  • Lodging expenses: the costs for a hotel or a temporary residence. An allowance will only be granted if the employee incurs these costs, so staying at a friend’s house for example would not be valid;
  • Meal expenses: the costs for breakfast, lunch, and dinner;
  • Incidental expenses: money granted to an employee for additional expenses they may incur (such as laundry or tips). Incidental expenses are usually combined with meal expenses.

      In principle, this daily allowance is tax-free. However, in the case where the allowance exceeds the federal per diem rate, the excess will be considered taxable income. The employer can also choose to pay less than the federal per diem rate. In such a case, the daily allowance will be tax-free.

      For the daily allowance to be tax-free, employees must file an expense report within a reasonable period (60 days). This expense report needs to include the following information:

      • The business purpose of the trip;
      • The date & location of the business trip;
      • Receipts for accommodation.
          Bulb Icon
          Learn more about how you can add details of the trip in Rydoo:

          It is important to note that transportation costs and mileage allowances are not covered by per diems.

          The per diem rates differ based on whether it is a domestic business trip or a business trip abroad.

          Domestic business trips

          The maximum daily allowance rates for domestic trips are defined per state. Each year the U.S. General Services Administration (GSA) publishes the rates (applicable since 1 October) and they can be found on GSA’s website

          You can also find the complete breakdown of the lodging, meal and incidental expenses on the website. Depending on the location, the domestic daily rates will fall under one of these amounts:

          M&IE Total ContinentalBreakfast/Breakfast Lunch Dinner Incidental expenses First & Last Day of Travel (always calculated at 75%)
          $59 $13 $15 $26 $5 $44.25
          $64 $14 $16 $29 $5 $48.00
          $69 $16 $17 $31 $5 $51.75
          $74 $17 $18 $34 $5 $55.50
          $79 $18 $20 $36 $5 $59.25

          The separate amounts for breakfast, lunch and dinner are listed, in case you need to deduct any of those meals.

          Example: You receive an M&IE total allowance of $59. Free breakfast is supplied by the hotel which means $13 needs to be deducted from the per diem allowance. The total allowance in this case will thus be $46.

          Business trips abroad

          For the maximum amount of daily allowance for business trips abroad, the daily allowances set by the US Department of State are used. The rates can be found on their website.

          Again there is a complete breakdown of the lodging, meal and incidental expenses on GSA’s website. The separate amounts for breakfast, lunch and dinner are listed, in case you need to deduct any of those meals, similarly to the domestic business trips explained above.

          Last changed