Business Travel Per Diem Calculator
How to Calculate Per Diem Rates for Business Travel
Per diem (Latin for "per day") is a daily allowance given to employees to cover costs incurred while traveling for business. It typically covers lodging, meals, and incidental expenses (M&IE). Calculating these rates accurately is essential for compliance with company policy and government regulations (such as the GSA in the United States).
Understanding the Components
To calculate a per diem reimbursement, you need to break down the expenses into two main categories:
- Lodging: This covers the cost of the hotel or accommodation. It is calculated based on the number of nights stayed.
- M&IE (Meals and Incidental Expenses): This covers breakfast, lunch, dinner, room service, laundry, and tips. It is calculated based on the number of days traveled.
The Per Diem Formula
The standard formula for calculating the total reimbursement for a business trip is:
Total Reimbursement = (Nights × Lodging Rate) + (Days × M&IE Adjusted Rate)
The GSA First and Last Day Rule (75%)
Most organizations follow the General Services Administration (GSA) guidelines for travel days. On the first and last day of travel, employees typically do not incur a full day's worth of meal expenses. Therefore, the standard rule is to reimburse only 75% of the M&IE rate for the day of departure and the day of return.
Example Calculation
Let's say an employee travels for 5 days to a city with a lodging rate of $100/night and an M&IE rate of $60/day.
- Lodging: 4 nights × $100 = $400
- M&IE (Days 2, 3, 4): 3 full days × $60 = $180
- M&IE (Day 1 & 5): 2 days × ($60 × 0.75) = $90
- Total: $400 + $180 + $90 = $670
Frequently Asked Questions
Is Per Diem Taxable?
In most cases, per diem payments are not taxable income to the employee if the payment does not exceed the federal per diem rate for the location and the employee provides the time, place, and business purpose of the travel. If the employer pays more than the federal rate, the excess amount is considered wages and is taxable.
Do I get per diem for same-day travel?
Per diem rules for same-day travel vary. Generally, if the travel does not require an overnight stay or substantial rest, the per diem (specifically the meal allowance) may be considered taxable income if paid.
Where do I find official rates?
For travel within the continental United States (CONUS), rates are established by the GSA. For foreign travel, rates are set by the State Department. For travel outside CONUS but within the US (like Alaska or Hawaii), rates are set by the Department of Defense.