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Per diem is an allowance paid to your employees for lodging, meals, and incidental expenses incurred when travelling. This allowance is in lieu of paying their actual travel expenses.

Incidental expenses are gratuities and other minor costs that are incurred while conducting business, in addition to major expenses such as hotel fees and ticket prices. Incidental expenses ancillary to the costs of transportation, meals, and lodging are common when an employee travels for business.

See section 5.02 of Rev. Proc. 2019-48 (or successor). The per diem rates in lieu of the rates described in Notice 2021-52 (the meal and incidental expenses only substantiation method) are $74 for travel to any high-cost locality and $64 for travel to any other locality within CONUS. 3. Changes in high-cost localities.

For example, a per diem payment for an information technology (IT) consultant working for the week in another city could be $200 per day—$100 for accommodations, $50 for food, and $50 for incidental costs.

The law was established to protect Federal employees by fairly reimbursing them for travel expenses. In addition, if a Federal employee cannot find a room within the established per diem rates, the travel policy allows the agency to reimburse the actual hotel charges up to 300 percent of the established per diem rates.

For meals and incidental expenses (M&IE), the standard GSA per diem tier rate is $55 to $76 per day, depending on where you're traveling. In some cases, the per diem rate may be higher if the city's cost of living is higher than the average. On its own, the standard rate for incidental expenses is $5 per day.

The amount of per diem to give your employee depends on the length, location and even time of year of their trip. For example, if an employee travels to a state where per diem is $139 per day, they will receive $130 for each day they stay there on business. For a four-day business trip, that would equal $520 in total.

You can provide the employee with the per diem amount of money up front, perhaps by giving the employee cash or assigning them a company credit card. Some companies also allow the employee to keep any amount they don't spend. Or, you can reimburse your employee when they return.