How to Set a Per Diem Policy for Your Company

A per diem policy tells employees how much they will be reimbursed each day for lodging and meals while travelling on company business — no receipts required for M&IE. Here's how to build one that works.

Choose a rate structure

• GSA rates: reimburse at the federal rate for each destination. Amounts vary by city and month. Best for companies that send employees across many locations.
• Fixed rate: a single flat per diem regardless of city (e.g. $200/day). Simpler to budget, but employees in expensive cities may find it insufficient.
• Tiered structure: one rate for high-cost cities (e.g. NYC, San Francisco) and a lower rate for standard destinations.

Decide what the per diem covers

Most policies cover lodging and M&IE separately. Some companies pay per diem only for M&IE and reimburse actual lodging on receipt. Others pay a fully combined daily rate. Be explicit so employees know what the allowance is meant to cover.

Apply the first-and-last-day rule

GSA policy pays M&IE at 75% on the first and last day of a trip. Matching this rule in your policy keeps reimbursements within the tax-free limit and aligns with what federal auditors expect.

Set eligibility and approval rules

• Who is covered: all travelling employees, directors and above, or specific roles.
• What trips qualify: customer visits, conferences, training, internal meetings with overnight travel.
• Pre-approval: trips over a certain length or cost may need manager sign-off in advance.

Documentation requirements

Per diem for M&IE does not require meal receipts, but you still need documentation of the trip itself: dates, destination and business purpose. Require employees to submit an expense report within 30 days of returning. For lodging, require the hotel receipt even when reimbursing at per diem.