What Is Per Diem? A Plain-English Guide

"What's the per diem on this trip?" is one of the first questions any seasoned business traveller asks before they book a flight. It sounds like jargon, but the idea behind it is simple, and once you understand it, expense reports stop being a mystery.

Per diem meaning: where the word comes from

Per diem is Latin for "per day," and that's exactly what it is — a set amount of money paid for each day someone is away from home on business, rather than the actual amount they spent. Instead of saving every hotel bill, coffee receipt and taxi stub, a traveller is paid a fixed daily figure to cover lodging plus meals and incidental expenses (M&IE) while away working. For US federal travel — and for the large number of companies and government contractors that mirror the federal system rather than invent their own — those daily figures are published by the General Services Administration (GSA).

It's worth being precise about what "per diem" refers to, because the term gets used loosely. Sometimes people mean the whole daily allowance (lodging plus meals). Sometimes they mean just the meals-and-incidentals half. And in staffing and healthcare, "per diem" can also describe a type of short-notice, day-rate employment that has nothing to do with travel reimbursement at all. This guide covers the travel-allowance meaning, which is by far the most common use in expense policy.

The two parts of a per diem payment

• Lodging — a maximum nightly rate for your hotel room, which varies by city and, in seasonal destinations, by month. It's a cap, not a fixed payment: you're generally reimbursed the actual room cost up to that ceiling.
• M&IE (meals & incidentals) — a flat daily allowance for breakfast, lunch, dinner and small incidentals such as tips for hotel staff or porters. Unlike lodging, M&IE is usually paid as a flat amount regardless of what you actually spend on food that day.

That split matters because the two halves behave differently. Lodging tracks a real cost (your invoice, up to a cap); M&IE is a genuine flat-rate allowance. A traveller who eats cheaply on the road effectively pockets the difference on the M&IE side — that's a deliberate feature of the system, not a loophole, because it rewards frugal spending without requiring anyone to itemise a grocery receipt.

How GSA sets the rate for each city

GSA surveys lodging costs and publishes specific per diem rates for roughly 300 higher-cost cities and counties across the continental United States (CONUS) each fiscal year. A convention hub like Boston or a resort town like Aspen will have its own lodging figure, and that figure can move up in peak-season months and back down in the off-season — see our guide on why GSA lodging rates change by month for how that seasonal swing works in practice.

The standard rate covers most of the country

Everywhere not separately listed by GSA falls under the standard CONUS rate, which for FY2026 is $110 for lodging and $68 for M&IE — $178 a day combined. That's the fallback figure that applies to the vast majority of US counties, since GSA only publishes bespoke rates for the higher-cost minority. If you're travelling to a smaller city or rural area, the standard rate is very likely what you'll use; you can check any destination instantly with our per diem calculator.

How the 75% first-and-last-day rule fits in

One detail trips up almost everyone doing this by hand: M&IE is only paid at 75% on the day you depart and the day you return, because the assumption is you didn't need a full day's meals on a day you were only partly travelling. A three-night trip therefore pays 75% + 100% + 100% + 75% of the daily M&IE rate, not four full days. Our dedicated guide to the 75% first-and-last-day rule walks through the exact math with worked examples.

Why per diem beats keeping receipts

Per diem removes an enormous amount of paperwork on both sides. Travellers don't have to itemise every coffee and snack; finance teams don't have to audit a shoebox of receipts line by line. As long as the trip is documented — dates, destination, business purpose — and the amount stays within the federal rate, the reimbursement is not treated as taxable income to the employee. We cover exactly where that tax-free line sits in is per diem taxable?.

“Per diem rates are used to reimburse government and contract employees for lodging, meals and incidental expenses incurred while on official travel.”

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

Who actually uses per diem

Federal civilian employees are the group the GSA rate table is built for, under the Federal Travel Regulation. But the reach goes well beyond government payrolls: government contractors are required to cap billable travel at the same GSA figures under the Federal Acquisition Regulation, and a large share of private companies simply adopt the GSA table as their own internal travel policy because it's free, well-documented, and already accepted by the IRS as a tax-safe benchmark. Travel nurses, consultants, auditors and field engineers all commonly work under some flavour of per diem — see our guide to travel nurse per diem for one specific example.