IRS Per Diem Rates 2026–2027: New Rates, Rules and Examples for Employers

Updated October 19, 2026 · Rates checked against IRS Notice 2026-60 and GSA Per Diem Bulletin FTR 27-01

New federal per diem rates took effect on October 1, 2026 and apply to travel through September 30, 2027. This guide lists every rate employers need, shows how to calculate a trip, and explains when per diem stays tax-free.

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Quick answer

For business travel on or after October 1, 2026, the IRS high-low per diem rates are $329 per day for high-cost localities and $230 per day for all other locations in the continental U.S. (CONUS). The GSA standard rate is $181 per day: $113 for lodging plus $68 for meals and incidental expenses (M&IE). Per diem paid at or below these rates under an accountable plan is not taxable to the employee.

Download IRS Notice 2026-60 (PDF) · Look up a city on GSA.gov

What changed on October 1, 2026

The federal per diem year runs from October 1 to September 30. For FY2027, rates rose again after a one-year freeze in FY2026.

High-cost list changes: Tucson, AZ; San Mateo/Foster City/Belmont, CA; Albuquerque, NM; and Cody, WY were added. Panama City, FL was removed. The high-cost season also changed for 15 localities, including New York City, Philadelphia, Napa and Aspen. See the full list of high-cost localities below.

What employers should do now: update the rates in your travel policy and expense tool, decide which rates you will use for October–December 2026 (see the transition rule below), and tell traveling employees.

What are IRS per diem rates?

Per diem rates are fixed daily amounts an employer can pay employees for lodging, meals and incidental expenses during business travel, instead of reimbursing every receipt. If the allowance stays within the federal rate and is paid under an accountable plan, the IRS treats the amount as substantiated and it is not taxable income.

Two agencies set the numbers used inside the continental U.S.:

• GSA sets the federal per diem rate for every CONUS location: a standard rate for most of the country and higher rates for about 295 non-standard areas.
• The IRS publishes an annual notice with simplified rates for businesses: the two-tier high-low method, the transportation industry rate and the incidental-only rate.

Rates for Alaska, Hawaii and U.S. territories come from the Department of Defense, and foreign rates come from the Department of State.

Getting per diem right is part of good payroll and expense management.

GSA standard and M&IE rates for 2026–2027

Most of the continental U.S. uses the standard rate of $181 per day ($113 lodging + $68 M&IE). Cities and counties with higher costs have their own lodging rate and an M&IE rate between $74 and $92. Some lodging rates also change by season. Look up the exact rate by city or ZIP code on GSA.gov.

Lodging and M&IE

Every per diem rate has two parts:

• Lodging covers the hotel or rental cost for the night. Taxes on lodging are not included in the lodging rate.
• M&IE covers meals plus incidental expenses such as tips to porters and hotel staff.

Employers can pay both parts as one daily amount, or reimburse lodging at actual cost and pay only the M&IE portion as a flat rate. Either works, as long as the travel policy says which one you use.

How much the IRS allows for meals per day

The M&IE rate splits into breakfast, lunch, dinner and incidentals. Use this breakdown if your travel policy reduces the daily allowance when a meal is provided (for example, at a conference). Federal employees must make this reduction; for private employers it is a policy choice. GSA did not change the M&IE tiers for FY2027.

First and last travel days

On the day of departure and the day of return, M&IE is paid at 75% of the full daily rate, as shown in the last column above. Lodging is paid in full for any night the employee stays away.

IRS high-low per diem method

The high-low method replaces hundreds of GSA locality rates with two rates for the whole continental U.S. It is the simplest option for businesses with frequent travel to many destinations.

The IRS sets only the total rate and the meal portion; the lodging figures are the total minus the M&IE portion.

Rules for using the high-low method

• CONUS only. The method applies to travel within the 48 contiguous states and the District of Columbia. Use DoD rates for Alaska, Hawaii and U.S. territories and State Department rates for foreign travel.
• Seasonal localities. Some localities are high-cost only for part of the year. Outside that period, use the $230 rate.
• Stay consistent for the calendar year. If you use the high-low method for an employee, you must use it for all of that employee's CONUS travel for the rest of the calendar year and cannot switch to the regular GSA locality rates.
• Meal portion for the 50% limit. For the employer's deduction, $86 (high-cost) or $74 (other) of each day's high-low allowance is treated as paid for meals.

2026–2027 high-cost localities

A locality is high-cost when its federal per diem rate is $280 or more. The full list below applies from October 1, 2026 to September 30, 2027 (IRS Notice 2026-60). Outside the listed period, a seasonal locality uses the $230 rate.

"All year" means October 1, 2026 to September 30, 2027. Removed for 2026–2027: Panama City, FL.

Travel between October and December 2026

Because the per diem year starts on October 1 but the tax year starts on January 1, the IRS allows a transition period. If you used per diem or high-low rates for an employee between January and September 2026, then for travel from October 1 to December 31, 2026 you can either:

1. Keep using last year's rates and high-cost list (Notice 2025-54: $319 / $225), or
2. Switch to the new rates and list (Notice 2026-60: $329 / $230) from October 1.

Whichever you choose, apply it consistently to all employees you reimburse under the per diem or high-low method. A business using the high-low method for an employee during the first nine months of the year cannot move that employee to the regular GSA locality rates for October to December. From January 1, 2027, use the Notice 2026-60 rates.

These transition rules come from sections 4.06 and 5.04 of Rev. Proc. 2019-48, as referenced in Notice 2026-60.

How to calculate per diem for business travel

Calculating per diem comes down to picking the daily rate, then adjusting for partial travel days. Employers use the same figures to calculate payroll taxes on any amount above the federal rate.

Step 1: Find the daily rate

Look up the destination on GSA.gov. Most cities use the standard $181 per day ($113 lodging + $68 M&IE). Businesses using the high-low method skip the lookup: $329 for a high-cost locality in its high-cost period, $230 everywhere else in CONUS.

Step 2: Count full travel days

Multiply the full daily rate by the number of full days at the destination. Three full days at the standard rate:

3 × $181 = $543

Step 3: Apply the 75% rule to departure and return days

M&IE on the first and last day is 75% of the daily M&IE rate.

$68 × 0.75 = $51 per travel day. For one departure day and one return day: 2 × $51 = $102

Step 4: Add lodging for the departure night

A five-day trip (three full days, two travel days) has four nights. Three are already covered by the full days. Add the departure night: 1 × $113 = $113

Total: $543 + $102 + $113 = $758

Step 5: High-cost example with the high-low method

A three-day trip to San Francisco (one full day, two travel days, two nights):

• Full day: 1 × $329 = $329
• Travel-day M&IE: 2 × ($86 × 0.75) = $129
• Departure-night lodging: 1 × $243 = $243

Total: $329 + $129 + $243 = $701

If your policy reduces per diem for provided meals, subtract that meal's value using the M&IE breakdown table above.

Is per diem taxable?

Per diem is not taxable when it is paid under an accountable plan and does not exceed the federal rate. Any amount above the federal rate, and all per diem paid under a nonaccountable plan, is taxable wages. These details often trip up employer payroll taxes filings.

Accountable plan requirements

An accountable plan must meet three conditions:

1. Business connection: the travel is for the employer's business.
2. Substantiation: the employee reports the time, place and business purpose of each trip. Under per diem, the amount is treated as substantiated up to the federal rate.
3. Return of excess: the employee returns any advance not used or not substantiated.

Under the IRS "fixed date" safe harbor, timing is reasonable when an advance is given no more than 30 days before the expense, the expense is substantiated within 60 days after it is paid or incurred, and any excess is returned within 120 days after it is paid or incurred.

Excess per diem

If a company pays $200 a day for travel to a standard-rate city, $19 a day ($200 − $181) is taxable wages. Run it through payroll with Social Security, Medicare and income tax withholding, and set up the right payroll deductions.

Receipts and the $75 rule

Under per diem, employees don't need meal receipts. They still record dates, places and business purpose. When lodging is reimbursed at actual cost, keep the hotel receipt. For expenses reimbursed at actual cost, the IRS requires receipts for lodging and for any other expense of $75 or more. Many teams use expense tracking software for this.

Special cases

Self-employed people

Self-employed individuals cannot use per diem for lodging; they deduct actual lodging costs. They can use the federal M&IE rate for the area of travel instead of keeping meal receipts, and the 50% limit applies to that amount. On days with no meal costs, they can instead deduct the $5 incidental-only rate, which is not subject to the 50% limit.

Employees who own part of the business

Per diem that covers lodging cannot be treated as substantiated for an employee who is related to the employer, which includes owning more than 10% of the business. These employees can still receive an M&IE-only per diem.

Transportation industry

Employers in the transportation industry, such as trucking companies, can use a flat M&IE rate of $80 per day within CONUS and $86 outside CONUS instead of locality M&IE rates (lodging is handled separately). An employer that used these rates for an employee in 2026 must keep using them for that employee through December 31, 2026. For travelers subject to Department of Transportation hours-of-service rules, 80% of meal costs is deductible instead of 50%. The employer claims it for reimbursed meals; self-employed drivers claim it for their own. Employee drivers cannot deduct unreimbursed meal costs.

Alaska, Hawaii, U.S. territories and foreign travel

The high-low method and GSA rates do not cover these locations. Use Department of Defense rates for Alaska, Hawaii and U.S. territories, and Department of State rates for foreign travel.

IRS per diem vs actual expense reimbursement

Per diem pays a flat daily rate regardless of what the employee spends. Actual expense reimbursement pays back what was spent, backed by receipts. Many companies use per diem for routine domestic trips and actual expenses for unusual or very expensive travel.

How to create a per diem policy for your business

A written policy keeps travel pay consistent and protects the tax-free treatment. Run it against a payroll compliance checklist before rollout.

1. Define eligible travel: how far from the office, and how long away from home, before per diem applies. Same-day trips usually don't qualify.
2. Choose the method: GSA locality rates, the high-low method, or actual expenses for certain trips. Write down which applies where.
3. Reference "the current published rate": rates change every October 1, so avoid hardcoding numbers in the policy.
4. Set the October–December rule: state whether you switch to new rates on October 1 or on January 1, and apply it to everyone.
5. Set documentation and approval rules: trip dates, destination and business purpose, with manager approval before booking.
6. Set deadlines: expense reports within 60 days and returned advances within 120 days.
7. Review every fall: check the new IRS notice and GSA bulletin each September.

These records also matter for multi-state payroll and are the first thing a payroll audit will ask for.

This guide explains federal per diem rules for U.S. employers. It is not tax or legal advice. Rates and rules change, so confirm your obligations with the IRS, GSA or a qualified adviser.

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Final thoughts

The October 1, 2026 update raised standard lodging to $113 and the high-low rates to $329 and $230. Now is a good time to update your travel policy, your expense tool and your employees. A documented process paired with the current federal rates keeps travel pay simple and tax-free.