Per Diem Meal Allowance: GSA Rates, High-Low Method, and Tax Rules

A per diem meal allowance is a flat daily amount an employer pays a business traveler to cover food, tips, and small incidentals instead of reimbursing every receipt. For fiscal year 2026, the standard federal rate for meals and incidental expenses (M&IE) is $68 per day in most of the continental United States, rising in tiers to $92 per day in the most expensive metro areas. Payments at or below the federal rate for your destination stay tax-free when your employer follows the IRS substantiation rules; anything above that rate, or paid outside those rules, becomes taxable wages.

FY2026 Meal and Incidental Rates

The General Services Administration sets M&IE rates for the continental U.S., updated each October 1. For FY2026 the rates fall into five tiers, unchanged from FY2025.¹ Each tier breaks down by meal:²

$68: $16 breakfast, $19 lunch, $28 dinner, $5 incidentals
$74: $18 breakfast, $20 lunch, $31 dinner, $5 incidentals
$80: $20 breakfast, $22 lunch, $33 dinner, $5 incidentals
$86: $22 breakfast, $23 lunch, $36 dinner, $5 incidentals
$92: $23 breakfast, $26 lunch, $38 dinner, $5 incidentals

The tier depends on the destination, and you can look up any city by ZIP code on the GSA site.³⁴⁵⁶

What the Allowance Covers

The meal portion pays for breakfast, lunch, and dinner, including taxes and tips to servers. The $5 incidentals piece covers tips to baggage handlers, bellhops, and hotel housekeeping.² Lodging is a separate per diem component and never part of M&IE.

One detail catches people off guard: laundry, dry cleaning, pressing, and room service are all baked into the M&IE rate. You cannot claim any of them as a separate reimbursable expense on top of per diem.⁷

If your only travel cost is a tip or two because your employer provides all meals, the incidental-expenses-only rate is $5 per day, domestic or international.⁸

Partial Days and Provided Meals

You get 75 percent of the M&IE rate on the first and last day of a trip, regardless of what time you leave or return.⁹ For a $68 destination, that’s $51 on departure and return days with full $68 days in between. At the $92 tier, partial days pay $69. The same proration applies under either the regular GSA rate or the IRS high-low method.⁴ Trips longer than 12 hours but under 24 also get only 75 percent for each calendar day.

When a meal is provided — furnished by your employer, bundled into a conference fee, or served at government expense — you subtract that meal’s value from the day’s allowance using the GSA breakdown.⁹ At the $68 rate, a provided conference lunch reduces the day to $49. On partial days, the meal deduction comes off the already-reduced 75 percent figure. Deductions cannot push your reimbursement below the $5 incidental amount, so you always keep at least that much.

Two things do not trigger a deduction: complimentary hotel breakfasts and meals served on planes or trains. You keep the full allowance when a hotel puts out a continental spread or an airline hands you a snack.²

Do Private Employers Have to Follow GSA Rates

No. A private employer can pay more or less than the federal per diem. But any amount above the federal rate for your destination is taxable to you and subject to payroll withholding.⁷ Most employers use GSA rates as their benchmark precisely because staying at or below those figures keeps the whole payment tax-free.

The Simpler High-Low Method

Instead of looking up rates city by city, employers can use the IRS high-low method: one rate for designated high-cost locations, another for everywhere else. For the period beginning October 1, 2025, the total per diem (lodging plus meals) is $319 per day in high-cost areas and $225 elsewhere in the continental U.S. The meals-only portion is $86 in high-cost areas and $74 in the rest.⁸

A location qualifies as high-cost if its federal per diem is $272 or more. Some cities qualify year-round; others only during peak months. Once an employer starts using the high-low method for an employee in a calendar year, it must stick with that method for that employee for the rest of the year.

Transportation Industry Workers

Long-haul truckers, airline crews, railroad employees, and others subject to Department of Transportation hours-of-service rules receive a flat M&IE rate regardless of destination. Starting October 1, 2025, the rate is $80 per day for travel within the continental U.S. and $86 for travel outside it.⁸ These workers also get a better deduction percentage: 80 percent of meal costs versus the usual 50 percent, applied to both employees and self-employed owner-operators.¹⁰

If You’re Self-Employed

You can use the standard meal allowance in place of tracking every food receipt. Pick the M&IE rate for your destination and use that figure on Schedule C, or Schedule F if you’re a farmer.¹¹ The important limit: self-employed individuals can use per diem only for meals and incidentals, never for lodging. Lodging still requires actual receipts. And whether you use per diem or actual costs, only 50 percent of the meal amount is deductible.

Per diem simplifies the dollar math, not the recordkeeping. You still need to document the dates, destination, and business purpose of every trip. Travel logs, calendars, and spreadsheets work; estimates don’t.⁴

Keeping Per Diem Tax-Free

Per diem stays off your W-2 only when your employer’s reimbursement arrangement is an accountable plan. The IRS requires three things:⁴

Business connection. The travel must relate to work you performed as an employee.
Adequate accounting. You must report the time, place, and business purpose of the trip to your employer within a reasonable period.
Return of excess. If you receive more than the allowable rate, you have to give back the difference within a reasonable time.

Meet all three and the payment is excluded from income, excluded from payroll taxes, and never appears in Box 1 of your W-2. Miss any one and the whole payment flips to nonaccountable treatment, which is taxable.

Your Tax Home

The rules require you to be traveling “away from home,” and the IRS defines your tax home as the city where your main place of business sits, not where your family lives. If you live in Chicago but your regular workplace is Milwaukee, Milwaukee is your tax home and trips there aren’t deductible travel, even if you commute back on weekends.¹¹ When you work in more than one location, the IRS weighs where you spend the most time, the level of business activity, and the income earned at each.

The One-Year Rule

Per diem stays tax-free only for temporary assignments. Any assignment you realistically expect to last more than one year is treated as indefinite, and travel expenses for indefinite assignments aren’t deductible.¹¹ The trigger is your expectation, not the actual duration. If you initially expected six months and find out three months in that the project will run 14, per diem paid after that point becomes taxable.

When Per Diem Becomes Taxable

If your employer’s arrangement fails the accountable plan test, every dollar of per diem gets added to W-2 wages and is subject to income tax and payroll tax withholding.⁴ The same happens for any specific reimbursement where you didn’t account for expenses or return excess amounts on time.

Per diem also becomes taxable when it simply exceeds the federal rate for your destination. If your city’s GSA rate is $68 and your employer pays $100, the $32 excess is taxable even if the rest of the arrangement is accountable.⁷ This is the most common accident: an employer uses a single flat rate nationwide without adjusting for cheaper destinations, and part of the payment quietly becomes wages.

The 50 Percent Meal Deduction Limit

Whether an employer is deducting per diem paid to employees or a self-employed person is deducting their own meal costs, only 50 percent of the meal portion is deductible.¹⁰ The incidental piece isn’t subject to the 50 percent limit; only food and beverage is.

The high-low method makes this clean because the IRS has already split the meal portion out for you. Pay the $225 low rate and $74 of it is meals; your deductible amount is $37 (half of $74) plus the full incidental portion.

The temporary 100 percent restaurant deduction that existed in 2021 and 2022 has expired. For 2026, the 50 percent limit applies to essentially all business meals, with narrow exceptions for meals on oil platforms, commercial fishing vessels, and similar remote operations.¹⁰ Rates change each October, so if you administer per diem, check the latest annual notice — currently Notice 2025-54 — before setting your reimbursement schedule.⁸

1
Federal Register. Maximum Per Diem Reimbursement Rates for the Continental United States (CONUS)
2
U.S. General Services Administration. M&IE Breakdowns
3
U.S. General Services Administration. Per Diem Rates
4
Internal Revenue Service. Publication 463 (2025), Travel, Gift, and Car Expenses
5
U.S. Department of State. Foreign Per Diem Rates by Location
6
Federal Register. Revised Non-Foreign Overseas Per Diem Rates
7
Internal Revenue Service. Per Diem Payments Frequently Asked Questions
8
Internal Revenue Service. Notice 2025-54 – 2025-2026 Special Per Diem Rates
9
eCFR. 41 CFR Part 301-11 – Subsistence Expenses
10
Office of the Law Revision Counsel. 26 USC 274 – Disallowance of Certain Entertainment, Etc., Expenses
11
Internal Revenue Service. Topic No. 511, Business Travel Expenses