What Are Incidentals in Per Diem: Rate, Coverage, and Taxes

Incidentals in per diem are a narrow category of small travel costs — chiefly tips to porters, hotel and ship staff, and ATM transaction fees — that federal travelers cover with a flat $5 daily allowance inside the continental United States. The amount is bundled into the Meals and Incidental Expenses (M&IE) rate the General Services Administration publishes for each location, and it stays at $5 no matter how expensive the destination is.1U.S. General Services Administration. M&IE Breakdowns

What the Incidental Allowance Covers

The Federal Travel Regulation at 41 CFR 300-3.1 defines incidentals as a short, closed list.2eCFR. Title 41 Section 300-3 Only four types of cost qualify:

  • Tips to porters and baggage carriers at hotels, airports, or train stations.
  • Tips to hotel staff, including housekeeping and concierge.
  • Tips to staff on ships during official travel.
  • ATM transaction fees for cash withdrawals while traveling.

The GSA repeats this definition in its per diem FAQ, describing incidentals as fees and tips given to porters, baggage carriers, hotel staff, and staff on ships.3U.S. General Services Administration. Frequently Asked Questions, Per Diem Anything outside that list falls into a different reimbursement bucket, even when it feels like an ordinary trip cost.

What Incidentals Do Not Cover

Many routine travel expenses look like incidentals but aren’t. These are reimbursed through separate channels:

  • Ground transportation. Taxi and rideshare fares, tolls, subway passes, and GPS rentals are transportation expenses.
  • Baggage fees. Charges for moving luggage between a workplace and a terminal are reimbursed separately from per diem.
  • Lodging taxes. Hotel occupancy taxes belong to the lodging allowance, not M&IE.
  • Meals. Food is its own portion of M&IE. On a $68 M&IE day, $16 covers breakfast, $19 lunch, and $28 dinner, leaving $5 for incidentals.1U.S. General Services Administration. M&IE Breakdowns
  • Mandatory hotel service charges. Fees a hotel bundles into the room rate are generally treated as part of the lodging cost.4eCFR. Title 41 Part 301-11 – Subsistence Expenses

Sorting these correctly on an expense report prevents rejected claims and delayed reimbursement.

The Standard Rate: $5 Per Day

For fiscal year 2026, the incidental portion of the M&IE rate is $5 per day at every CONUS location.1U.S. General Services Administration. M&IE Breakdowns A rural county and downtown San Francisco produce the same $5. The meal portion changes across M&IE tiers, but the incidental piece does not.5Federal Register. Maximum Per Diem Reimbursement Rates for the Continental United States (CONUS)

Laundry: The Overseas Difference

For travel outside the contiguous United States — foreign countries, Hawaii, Alaska, and U.S. territories — the incidental portion also covers laundry, dry cleaning, and pressing of clothing.2eCFR. Title 41 Section 300-3 Because those costs are folded in, OCONUS incidental amounts are set higher and vary by location rather than sitting at a flat $5.

Inside CONUS, laundry is not part of incidentals. A 2025 reorganization of the Federal Travel Regulation removed laundry from its own distinct reimbursement category, so whether and how it gets reimbursed now depends on the individual agency’s miscellaneous-expense policy.6Federal Register. Federal Travel Regulation – Reorganizing and Streamlining the Federal Travel Regulation To Improve Operational Efficiency Either way, don’t try to claim domestic laundry against the $5 incidental amount.

Partial Days and Provided Meals

You don’t collect the full M&IE rate on every day of a trip. On the first and last days of travel, you receive 75% of the applicable M&IE rate — for a $68 location, that’s $51 rather than $68.4eCFR. Title 41 Part 301-11 – Subsistence Expenses

When the government furnishes meals, whether through a conference registration fee or a government facility, you deduct the value of each provided meal from your M&IE claim. For a $68 rate, that is $16 for breakfast, $19 for lunch, and $28 for dinner.4eCFR. Title 41 Part 301-11 – Subsistence Expenses Two situations don’t trigger a deduction: a complimentary meal from the hotel, like a free continental breakfast, and a meal served by a common carrier, like an in-flight meal on an airplane.

A floor protects the incidental portion. Meal deductions on a partial travel day cannot push your reimbursement below the incidental amount, so you always receive at least the $5 for any authorized CONUS travel day, even if every meal is furnished.4eCFR. Title 41 Part 301-11 – Subsistence Expenses

Receipts and Documentation

You don’t need to keep receipts for individual tips or ATM fees. The flat-rate structure of per diem replaces actual-cost reimbursement, so the incidental piece requires no itemization. Your expense report only needs to establish the travel itself — destination, dates, and business purpose — and the correct M&IE rate is applied from the GSA tables.3U.S. General Services Administration. Frequently Asked Questions, Per Diem

Tax Treatment

Per diem payments, including the incidental portion, are not taxable income as long as they do not exceed GSA rates. The same holds for private-sector employees whose employers run an accountable plan, meaning the employee substantiates business purpose, time, and place, and returns any excess within a reasonable period.

When an employer pays more than the federal rate for a location, the overage becomes taxable wages. It appears in Box 1 of Form W-2, while the portion up to the federal rate is reported under Code L in Box 12 and is not taxed.7Internal Revenue Service. Publication 463 – Travel, Gift, and Car Expenses Some private employers set rates above GSA levels; the difference is ordinary income subject to payroll and income taxes.

The Incidental-Expenses-Only Deduction

The IRS also allows a standalone $5-per-day deduction for incidental expenses only, available to a traveler who does not claim the full M&IE per diem. It applies to any CONUS or OCONUS location. For travel on or after October 1, 2025, IRS Notice 2025-54 keeps that rate at $5 per day.8Internal Revenue Service. 2025-2026 Special Per Diem Rates – Notice 2025-54 It’s useful for self-employed travelers and for employees whose employers reimburse meals at actual cost but not tips and small service fees.