What Is Per Diem? A Plain-English Guide

Per diem is Latin for "per day." Instead of saving every receipt, a traveller is paid a fixed daily amount to cover lodging plus meals and incidental expenses (M&IE) while away on business. For US federal travel — and for most companies and government contractors that mirror the federal system — those daily amounts are set by the General Services Administration (GSA).

The two parts of a per diem

• Lodging — a maximum nightly rate for your hotel, which varies by city and by month (it's higher in peak season).
• M&IE — a flat daily allowance for meals and small incidentals such as tips. The full M&IE rate applies on full travel days.

The standard rate covers most of the country

GSA publishes specific rates for a few hundred higher-cost cities and counties. Everywhere else falls under the standard CONUS (continental US) rate, which for FY2026 is $110 for lodging and $68 for M&IE — $178 a day combined.

Why per diem beats keeping receipts

Per diem removes the paperwork: travellers don't itemise every coffee, and finance teams don't audit them. 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.