Editorial · April 25, 2023
Per Diem Rates: How GSA Sets Travel Allowances
Per diem rates are the daily limits for lodging and meals on work trips. In the United States, the General Services Administration (GSA) sets them for the lower 48 states and Washington, DC. Federal agencies use them to repay staff on official travel. Many employers and tax filers look at the same tables, so it helps to know how they work.
What the GSA rates cover
A federal per diem rate has two parts. One is a top limit for lodging. The other is meals and incidental expenses, called M&IE. Incidentals are small costs such as tips for porters and baggage handlers.
GSA sets these rates for the continental United States, known as CONUS. That means the 48 contiguous states and the District of Columbia. Rates are set by fiscal year. A fiscal year starts on October 1 each year. So the rates you use in April 2023 were set for the year that began on October 1, 2022.
Sources: GSA, Per Diem Rates and FY 2023 Per Diem Highlights pages.
The standard rate and the higher rates
Most of the country gets one standard rate. For fiscal year 2023, the standard rate is $157 a day. That is $98 for lodging and $59 for M&IE. It covers about 2,600 counties.
Some places cost more. GSA calls them non-standard areas. For fiscal year 2023 there are 316 of them, and each has a higher rate than the standard one. The standard lodging limit rose from $96 to $98 this year. The M&IE tiers did not change. They run from $59 to $79 a day, and the standard M&IE rate stays at $59.
Sources: GSA, FY 2023 Per Diem Highlights.
How the lodging number is chosen
GSA bases lodging limits on the average daily rate, or ADR. ADR is a common hotel industry measure. You get it by dividing a hotel's room revenue by the number of rooms it rented. It tells you what a typical room in that area actually sold for.
GSA has used this method since fiscal year 2005. It means the limit follows the real market in each place. A city with pricey hotels gets a higher lodging limit than a rural county.
The rules also leave room for real life. The Federal Travel Regulation lets agencies repay actual expenses when the per diem rate is not enough to cover necessary costs. The rule is in sections 301-11.300 through 301-11.306.
Sources: GSA, FY 2023 Per Diem Highlights.
How to look up a rate by city
GSA runs a free lookup on its Per Diem Rates page. Follow these steps:
- Pick the fiscal year. The page offers 2023, 2022 and 2021.
- Type a city and state, or a ZIP code. You can also click the map or search by state.
- Read the lodging limit and the M&IE amount for that place.
Check the travel dates too. A trip that crosses October 1 can fall under two sets of rates. GSA also has a per diem tool on its main travel page that works out the allowance for a whole trip.
The M&IE breakdown page shows how the meal amount splits up. At the $59 level, breakfast is $13, lunch is $15, dinner is $26 and incidentals are $5. On the first and last day of a trip, travelers get 75 percent of the daily amount. At the $59 level, that is $44.25. If a conference fee already pays for a meal, that meal's amount is taken out of the claim.
Sources: GSA, Per Diem Rates page; GSA, M&IE Breakdown.
How the IRS uses per diem rates
Per diem rates matter for taxes too. The IRS lets taxpayers use a per diem rate to prove the amount of travel costs, instead of keeping every receipt for each meal. The rules are in Revenue Procedure 2019-48. Each year the IRS issues a notice with the new special rates.
For travel from October 1, 2022, the IRS issued Notice 2022-44. It lists these rates:
- Under the high-low method, $297 a day for travel to a high-cost locality and $204 a day for other places in CONUS.
- Of those amounts, $74 (high) and $64 (low) are treated as paid for meals.
- A special M&IE rate of $69 a day for transportation industry workers in CONUS.
- $5 a day for the incidental-expenses-only deduction.
The IRS rates are not the same as the GSA tables. They come from separate rules, and they serve a tax purpose. GSA says it cannot answer tax questions. For those, call the IRS at 800-829-1040.
Sources: IRS Notice 2022-44, 2022-2023 Special Per Diem Rates; GSA, Per Diem Rates page.
What to do before your next trip
First, find out which table your employer or contract names. Some use the federal rates. Others set their own. Next, look up the city for your travel dates and write down the lodging limit and the M&IE amount. Then keep your travel dates and costs on record, even if you plan to claim the per diem rate.
If a tax rule is unclear, check with a tax preparer or the IRS. This page gives general facts on per diem rates, not tax advice.
Sources: GSA, Per Diem Rates page; IRS Notice 2022-44.
Sources
- U.S. General Services Administration, Per Diem Rates (gsa.gov/travel/plan-book/per-diem-rates)
- U.S. General Services Administration, FY 2023 Per Diem Highlights
- U.S. General Services Administration, M&IE Breakdown
- Internal Revenue Service, Notice 2022-44, 2022-2023 Special Per Diem Rates