Introduction

Per diem, which is Latin for “per day,” is a daily allowance used by businesses and organizations to reimburse employees for expenses they incur while traveling on company business. The per diem rate typically covers meals, lodging, and incidental expenses. In this article, we will explore how per diem rates are calculated and how you can determine the appropriate rate for your travel.

Determining Per Diem Rates

1. General Services Administration (GSA) Rates

In the United States, the GSA sets standard per diem rates that federal employees and contractors must adhere to when traveling for work. These rates are updated annually and vary based on location and time of year. To find the current GSA rates for a specific city or area in the United States, visit the GSA’s Per Diem Rates Lookup tool (https://www.gsa.gov/travel/plan-book/per-diem-rates).

2. Other Governments’ Rates

If you are traveling internationally or working with a non-federal organization, your employer may use different guidelines to determine per diem rates. Many countries’ governments set their own rates for public employees, which may also be used by private companies as a benchmark.

3. Company Policy

Some employers establish their own per diem policies that do not rely on government guidelines. Companies may base their rates on factors like industry standards, the cost of living in different locations, or employee seniority. Be sure to check your employer’s policies or speak with your human resources department if you are unsure about the per diem rates applicable to your travels.

Calculating Daily Reimbursements

Once you have determined your destination’s per diem rate based on the above sources, you will need to allocate it among various expenses:

1. Lodging

Lodging refers to expenses related to overnight accommodations such as hotels or motels. Per diem rates usually set a maximum amount you can spend on lodging per night. Some employers may require you to choose accommodations within a certain price range or prove that cheaper options were unavailable.

2. Meals

The per diem rate for meals typically includes breakfast, lunch, and dinner, and sometimes even snacks and beverages. As with lodging, employers may set limits on meal expenses or require receipts as proof of the amount spent.

3. Incidentals

Incidental expenses cover miscellaneous costs not covered by the lodging and meal rates. This can include tips for housekeeping, business center services, and laundry. The per diem amount for incidental expenses is usually much smaller than lodging and meals.

Conclusion

Per diem rates are an essential component of business travel that allows employees to be reimbursed for their daily expenses while away from home. Calculating these amounts involves considering factors such as location, industry standards, and company policies. By understanding how per diem rates are determined and how to allocate them across different expense categories, you can ensure worry-free travel while managing your budget effectively.