Per Diem Charges, 2023
Tier
Breakfast
Lunch
Dinner
Incidental Bills
Complete
1
$13
$15
$26
$5
$59
2
$14
$16
$29
$5
$64
3
$16
$17
$31
$5
$69
4
$17
$18
$34
$5
$74
5
$18
$20
$36
$5
$79
Lodging Bills
The lodging class covers lodging for in a single day stays, resembling motels, motels, inns, resorts, and residences. A separate per diem price is ready for each M&IE and lodging for every location. For instance, for the 2024 fiscal yr, the per diem charges for Atlanta is $173 for lodging and $74 for M&IE.For Chicago, lodging charges vary between $213 and $233, relying on the month, and the M&IE per diem is $79.
The GSA stipulates completely different charges for the primary and final day of journey. Although the complete per diem for meals for a Tier 1 location is $59, the beginning and ending day by day price is $44.25. For a Tier 5 location, solely $59.25 may be claimed (versus most $79).
Per Diem Charges by Location
Per diem charges are primarily based on an space’s price of dwelling. Per diem charges in giant cities, resembling Chicago, New York, and Los Angeles are larger than non-metropolitan areas as a result of items and companies in bigger cities are typically dearer. Lodging charges may fluctuate by month in response to provide and demand. The best lodging per diem in New York Metropolis, for instance, coincides with autumn, the season that pulls probably the most vacationers and enterprise vacationers. Per diem charges are up to date yearly and develop into efficient October 1, the primary day of the federal authorities’s fiscal yr.
Discovering Charges for Every Location
Ask your employer’s Human Assets or Accounting division for particular charges, or search for the data by visiting the GSA web site, the place you’ll be able to search by metropolis, state, or zip code for the present fiscal yr (October 1 by September 30). If you wish to view the following fiscal yr or another yr since 1997, search by state and choose the suitable yr from the drop-down menu. Click on “Discover per diem charges” to view the outcomes, that are damaged down by main vacation spot, county, most lodging by month, and meals and incidental bills (M&IE).
For those who seek for an space that is not lined by GSA tables (e.g., Hawaii, which isn’t a part of the Continental U.S.), two hyperlinks will seem that may direct you to the suitable web site: the Division of Protection for non-foreign journey (Alaska, Hawaii, Puerto Rico, and Guam) and the State Division for all international locations.
Employer Use of GSA Charges
Whereas most companies use the per diem charges set by the GSA, they will use various reimbursement strategies. For instance, employers can use the IRS high-low methodology, which establishes one flat price per diem for high-cost areas (e.g., New York, Chicago, and the District of Columbia), and one flat price for all different areas.
Staff are sometimes anticipated to make use of the per diem price to cowl their bills and to maintain receipts for any bills that exceed the per diem price. In some circumstances, workers could also be required to return any extra funds to the employer. Final, employers use GSA charges to assist finances for journey; by understanding the place sure workers could also be touring within the upcoming yr, the corporate can forecast what their day by day expenditure will probably be as soon as the per diem charges are set early within the yr.
Per Diem for Enterprise Bills (Mileage)
Per diem mileage charges for taxes are the charges established by the IRS that taxpayers can use to calculate deductible journey bills for tax functions. These charges are used to find out the usual mileage deduction that taxpayers can take for business-related journey utilizing their private car.
For the tax yr 2024, the IRS established an ordinary mileage price of 67 cents per mile for enterprise miles pushed.
The aim behind this per diem mileage price is to reimburse workers for prices incurred driving their private car for prices they don’t seem to be in any other case reimbursed for. As well as, it might be unfeasible to calculate the precise quantity of depreciation, fuel use, oil use, and different overhead price for each journey. As a substitute, eligible customers can merely use the fastened price for each eligible mile pushed.
The usual mile price for 2024 is 67 cents per mile.
Taxes on Per Diem Reimbursements
Per diem funds usually are not thought-about wages — and are due to this fact non-taxable — so long as they meet sure situations. You can be topic to taxes if any of the next are true:
Fee is greater than the allowable federal per diem rateYou didn’t file an expense report together with your employerYour expense report didn’t embody the date, time, place, quantity, and enterprise goal of the expenseYour employer gave you a per diem and did not require an expense report.
If any of the above conditions are true, your per diem will probably be thought-about wages and will probably be topic to earnings tax withholding and payroll taxes. The quantity will probably be reported by your employer in your W-2 type. Whether it is simply that your per diem was above the allowable federal per diem price, solely the surplus quantity will probably be thought-about wages.
To substantiate your journey and associated bills, you may be required to take care of a log that features the times you traveled for enterprise, the place you went, and the enterprise goal of the journey. Word: in case your business-related journey lasts longer than a yr in a single location—even when it includes two or extra separate assignments—you will not be eligible for tax exemption underneath the per diem tax guidelines. To keep away from unfavorable tax penalties, seek the advice of together with your tax advisor earlier than embarking on an prolonged enterprise journey.
Per Diem As a Wage Different
As a result of per diem funds are non-taxable, some folks could elevate the query, “Can I settle for a decrease wage with per diem as an alternative of a better wage with no per diem?” The reply is “no.” Per diem insurance policies can’t be created in a fashion that permits what must be waged to be labeled as one thing else—on this case, per diem.
It is because the intention of per diem is just not further compensation however for a reimbursement of expenditures. It is assumed that these touring might want to eat a number of meals per day and spend cash on incidentals whereas they’re away from house. These bills usually are not meant to incentivize a employee however quite guarantee a protected, wholesome way of life can happen whereas touring for work.
Per Diem vs. Stipend
Per diem refers to a day by day allowance that an employer pays to an worker to cowl their bills whereas on a enterprise journey or task. In a really related method, a stipend is a set amount of cash that an employer pays to an worker. A stipend could also be paid regularly, resembling month-to-month or weekly, or it might be a one-time fee for a particular undertaking or task.
Stipends are sometimes utilized in tutorial and analysis settings. They’re normally paid to college students or researchers to help their dwelling bills whereas they conduct their research or analysis. Though each per diem and stipends could also be used to cowl dwelling bills, per diem is extra generally used for bills away from a house. As well as, a stipend is usually a less-rigidly calculated quantity that merely awards a broad quantity for use for extra generic functions.
Benefits and Disadvantages of Per Diem
Execs of Per Diem
There’s many causes corporations and people could want per diem over precise expense reimbursement. By utilizing per diem charges, employers can set up a predictable journey finances and keep away from sudden bills that will come up throughout enterprise journey. That is very true for journey set additional into the long run as per diem could also be set for the whole upcoming yr.
Per diem eliminates the necessity for workers to maintain monitor of and submit receipts for particular person bills. This reduces the executive burden on each the worker and employer. As a result of workers do not need to maintain monitor of particular person bills, they will spend extra time centered on their enterprise aims in the course of the journey.
Additionally by utilizing per diem charges, the tax reporting course of for each the worker and employer may be simplified. As a substitute of doubtless being in non-compliance with non-allowable precise bills having been reimbursed, it’s merely safer and extra easy .
Per diem may be seen as a extra equitable methodology of reimbursing workers for his or her journey bills. Per diem eliminates the necessity for workers to pay out-of-pocket bills and await reimbursement. As well as, all workers get reimbursed the identical quantity (assuming they’re touring to the identical location).
Cons of Per Diem
Sadly, there’s additionally loads of causes corporations and workers would favor getting reimbursed for precise prices incurred. First, per diem charges could not cowl all bills incurred throughout enterprise journey. Because of this workers could have to cowl bills out-of-pocket for something not lined by per diem however nonetheless vital for his or her journey.
Firms could not want per diem as a result of charges are set primarily based on the situation of the enterprise journey. As a result of the character of every worker’s journey will probably be completely different, corporations threat overpaying or underpaying workers as precise prices incurred will hardly ever if ever be precisely the identical because the per diem quantity.
Although per diem charges merely and cut back threat in some areas, they enhance threat in others. Employers should make sure that their per diem charges adjust to tax laws and are cheap primarily based on business requirements. Failure to take action may lead to penalties or fines from tax authorities.
Creates extra predictable journey finances
Might cut back administrative burdens
Might enhance worker satisfaction as a consequence of simplicity and time financial savings
Promotes fairness by reimbursing everybody the identical quantity (assuming journey to the identical location)
Might lead to workers needing to pay for non-per diem bills out of pocket
Might put corporations in danger if incorrect charges are paid
Typically overpays or underpays workers as actuals doubtless don’t precisely match charges
Is Per Diem a Wage?
No, per diem is a variable expense corporations pay to workers for bills incurred away from their house. It is normally solely incurred when employees are touring or on task. Per diem is just not a set quantity, particularly contemplating that completely different geographical areas can have completely different per diem charges.
What Is the Most Per Diem Allowed?
The IRS will stipulate particular per diem charges for journey or bills incurred in high-cost areas. For instance, the 2024 particular per diem charges included a most of $309 for journey to high-cost localities.
Is Per Diem Reported to the IRS?
Per diem in extra of federally accepted per diem charges is handled as taxable earnings and is reported to the IRS as a part of regular earnings reporting. Regular per diem paid underneath an accountable plan is just not included in an worker’s W-2.
Do I Must Acquire Receipts If I Obtain Per Diem?
Seek the advice of your organization’s receipt coverage to greatest perceive whether or not receipts are required. In lots of circumstances, corporations attempt to keep away from requiring workers from sustaining receipts; as an alternative, they comply with merely pay government-approved charges for meals and travel-related prices. By doing so, workers can merely deal with their travel-related work and never want to gather receipts.
Is Per Diem Paid Out on Weekends?
Once more, it is perhaps greatest to seek the advice of your organization’s particular coverage round per diem. Usually, corporations typically have insurance policies in place to cowl meals and lodging for days labored, even on weekends. It might be vital for employees to attend a weekend convention; on this circumstances, per diem can be incurred over the weekend.
The Backside Line
Per diem funds present reimbursement to workers who journey for enterprise functions. Charges fluctuate by location and time of yr and are damaged down into two classes: lodging and meals and incidental bills (M&IE). So long as your funds don’t exceed the utmost federal per diem price, they’re non-taxable; if per diem funds exceed federal limits, any extra will probably be taxed as bizarre earnings.
Per diem charges could change yearly, and per diem tax legal guidelines may be difficult. Seek the advice of a professional tax specialist when you have questions or issues about your organization’s per diem coverage.