Types of Per Diem Allowances Explained

"Per diem allowance" can mean several genuinely different things depending on who is paying and under what rules — and mixing them up is a common source of confusion when comparing a job offer, a client's expense policy, or your own company's travel rules against "what per diem is supposed to be." Here's how to tell them apart.

1. GSA per diem (the federal standard)

The General Services Administration publishes separate rates for lodging (per night) and M&IE (per day) for hundreds of US cities. These are the benchmark for federal employee travel and for most government contractor reimbursements, and they're the figures most private companies reference even when they aren't legally required to. They vary by city and, for lodging in seasonal destinations, by month — see our guide on why GSA lodging rates change by month.

2. Private-employer per diem

Many companies mirror the GSA rates exactly to keep reimbursements tax-free without extra administrative work. Others set a single flat daily allowance (for example, $250 all-in) that employees can use as they see fit, regardless of destination. A flat rate above the GSA level for a given city turns the excess into taxable income, so employers using a flat figure need to check it against GSA's ceiling for their most expensive destinations, not just their average one.

3. M&IE-only per diem

Some employers pay per diem only for meals and incidentals and reimburse actual lodging on receipt, up to a cap. This is the most common hybrid in the private sector — it removes the need for meal receipts without giving employees a blank cheque for hotel bookings, and it's often the easiest structure to explain to a workforce that isn't familiar with the full GSA system.

4. International per diem (OCONUS)

Travel outside the continental US uses rates set by the Department of Defense (for military and civilian DoD employees) or the State Department (for foreign affairs employees), not the GSA CONUS table. These OCONUS rates can be significantly higher than domestic GSA rates in expensive foreign cities. See our full comparison in OCONUS vs CONUS per diem for exactly which agency sets which region's figures.

“Per diem allowances for locations outside the continental United States are established by the Department of Defense and the Department of State, not the General Services Administration.”

— U.S. General Services Administration, gsa.gov

Tax treatment across allowance types

• At or below the GSA rate, with a trip report: fully tax-free under the IRS accountable plan — see is per diem taxable? for the complete rules.
• Above the GSA rate: the excess is taxable wages, subject to income tax and payroll tax.
• No trip report filed: the entire per diem becomes taxable, regardless of the amount paid.

Why the distinction matters when comparing offers or policies

If you're evaluating a job offer, a client contract, or your own company's draft travel policy, knowing which type of per diem is being described tells you what to actually check: for GSA-based per diem, check the destination's published rate; for a flat company figure, check it against the GSA ceiling for your most expensive likely destination; for OCONUS travel, check the correct DoD or State Department table rather than the domestic GSA figures.