A per diem rate can be used by an employer to reimburse employees for combined lodging and meal costs, or just for meal costs alone.
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The IRS has released its annual update of special per diem rates for taxpayers to use in substantiating business expenses while traveling away from home.
The new numbers take effect as of October 1, 2025, and are to be used for per diem allowances paid to any employee on or after this date for travel away from home. As always, the rates include those for the transportation industry, the rate for the incidental expenses, and the rates and list of high-cost localities for purposes of the high-low substantiation method.
The IRS allows the use of per diem (that’s Latin meaning “for each day”—remember, lawyers love Latin) rates to make reimbursements easier for employers and employees. Per diem rates are a fixed amount paid to employees to compensate for lodging, meals, and incidental expenses incurred when traveling on business, rather than calculating the actual expenses.
What Are Per Diem Rates?
A per diem rate can be used by an employer to reimburse employees for combined lodging and meal costs, or just for meal costs alone. Per diem payments are not considered part of the employee’s wages for tax purposes, as long as the payments are equal to or less than the federal per diem rate, and the employee provides an expense report within a reasonable amount of time. The report must include the business purpose of the trip, the date and location of the trip, and receipts for lodging if using the meals-only per diem rate. If the employee fails to provide an expense report meeting all these criteria, the payments will be taxable.
Employees don’t have to stick to the per diem rate. They can pay more or less than the federal per diem rate. However, if an employer pays more than the federal per diem rate, the excess will be taxable to the employee.
Self-Employed Taxpayers And Per Diem Rates
What about self-employed taxpayers? The good news is that while employees may not deduct business-related expenses on a Schedule A as part of the Tax Cuts and Jobs Act (that didn’t change under the One Big Beautiful Bill Act), self-employed taxpayers can still deduct business-related expenses on a Schedule C. That doesn’t mean that self-employed taxpayers can’t receive a per diem rate reimbursement—they can. However, the per diem rates are typically less useful for self-employed taxpayers, as they can only use them for meal costs.
M&IE Per Diem Rates For The Transportation Industry
As of October 1, 2025, the special meals and incidental expenses (M&IE) per diem rates for taxpayers in the transportation industry are $80 for any locality of travel in the continental United States (CONUS) and $86 for any locality of travel outside the continental United States (OCONUS)—those are the same as the rates for 2024.
The per diem rate for meals & incidental expenses (M&IE) includes all meals, room service, laundry, dry cleaning, and pressing of clothing, as well as fees and tips for persons who provide services, such as food servers and luggage handlers.
Incidental Expenses
The rate for incidental expenses remains $5 per day, regardless of the location (and no, it’s not your imagination—that flat rate has not been adjusted for inflation and has not changed in years). Incidental expenses include fees and tips paid at lodging, including porters and hotel staff.
High-Low Substantiation Method For Per Diem Rates
Since the cost of travel can vary depending on where—and when—you’re going, there are special rates for certain destinations. For purposes of the high-low substantiation method, the per diem rates are $319 for travel to any high-cost locality and $225 for travel to any other locality within the continental United States. The meals & incidental expenses only per diem for travel to those destinations is $86 for travel to a high-cost locality and $74 for travel to any other locality within the continental United States. (Those rates also didn’t change.)
High-Cost Locality Changes
Some areas are affected seasonally. Here’s the list for the 2025 fiscal year of high-cost localities with a federal per diem rate of $272 or more for a specified portion of the calendar year (the dates indicate when the high-cost rates apply):
Alabama
- Gulf Shores (Baldwin): June 1 – July 31
Arizona
- Phoenix/Scottsdale (Maricopa): February 1 – March 31
- Sedona: October 1 – December 31 and March 1 – September 30
California
- Los Angeles, Orange, and Ventura, and Edwards AFB, less the city of Santa Monica: October 1 – September 30
- Mammoth Lakes (Mono): December 1 – March 31
- Monterey: October 1 – September 30
- Napa: October 1 – November 30 and February 1 – September 30
- Palm Springs Riverside: October 1 – April 30
- San Diego: October 1 – September 30
- San Francisco: October 1 – September 30
- San Luis Obispo: June 1 – July 31
- Santa Barbara: October 1 – September 30
- Santa Monica: October 1 – September 30
- South Lake Tahoe (El Dorado): December 1 – March 31
- Sunnyvale/Palo Alto/San Jose (Santa Clara): October 1 – September 30
- Yosemite National Park (Mariposa): January 1 – April 30
Colorado
- Aspen (Pitkin): October 1 – September 30
- Denver/Aurora (Denver, Adams, Arapahoe, and Jefferson): October 1 – 31 and April 1 – September 30
- Silverthorne/Breckenridge (Summit): December 1 – March 31
- Steamboat Springs (Routt): December 1 – March 31
- Telluride (San Miguel): October 1 – September 30
- Vail (Eagle): October 1 – September 30
Delaware
- Lewes (Sussex): June 1 – August 31
District of Columbia
- Washington, D.C. (also the cities of Alexandria, Falls Church, and Fairfax, and the counties of Arlington and Fairfax, in Virginia; and the counties of Montgomery and Prince George’s in Maryland): October 1 – September 30
Florida
- Boca Raton/Delray Beach/Jupiter (Palm Beach and Hendry): January 1 – April 30
- Bradenton (Manatee): February 1 – March 31
- Cocoa Beach (Brevard): February 1 – March 31
- Fort Lauderdale (Broward): January 1 – April 30
- Fort Myers (Lee): January 1 – March 31
- Fort Walton Beach/DeFuniak Springs (Okaloosa and Walton): June 1 – July 31
- Gulf Breeze (Santa Rosa): June 1 – July 31
- Key West (Monroe): October 1 – September 30
- Miami-Dade: December 1 – May 31
- Naples (Collier): December 1 – April 30
- Panama City (Bay): June 1 – July 31
- Sarasota: February 1 – April 30
- Sebring (Highlands): February 1 – March 31
- Stuart (Martin): February 1 – March 31
- Tampa/St. Petersburg (Pinellas and Hillsborough): February 1 – April 30
- Vero Beach (Indian River): December 1 – April 30
Georgia
- Atlanta (Fulton and DeKalb): January 1 – March 31
- Jekyll Island/Brunswick (Glynn): March 1 – July 31
Idaho
- Boise (Ada): October 1 – 31 and June 1 – September 30
- Coeur d’Alene (Kootenai): June 1 – August 31
- Sun Valley/Ketchum (Blaine and Elmore): December 31 – March 31 and June 1 – September 30
Illinois
- Chicago (Cook and Lake): October 1 – November 30 and April 1 – September 30
Maine
- Bar Harbor/Rockport (Hancock and Knox): October 1 – 31 and May 1 – September 30
- Kennebunk/Kittery/Sanford (York): July 1 – August 31
- Portland (Cumberland and Sagadahoc): October 1 – 31 and June 1 – September 30
Maryland
- Ocean City (Worcester): June 1 – August 31
- Washington, D.C. Metropolitan Area (Montgomery and Prince George’s): October 1 – September 30
Massachusetts
- Boston/Cambridge (Suffolk and city of Cambridge): October 1 – September 30
- Falmouth City: July 1 – August 31
- Hyannis (Barnstable less the city of Falmouth): July 1 – August 31
- Martha’s Vineyard (Dukes): October 1 – September 30
- Nantucket: June 1 – September 30
Michigan
- Mackinac Island: July 1 – August 31
- Petoskey (Emmet): June 1 – August 31
- Traverse City (Grand Traverse ): July 1 – August 31
Minnesota
- Duluth (St. Louis): October 1 – 31 and June 1 – September 30
Montana
- Big Sky/West Yellowstone/Gardiner (Gallatin and Park): June 1 – September 30
- Kalispell/Whitefish (Flathead): July 1 – September 30
New Jersey
- Toms River (Ocean): July 1 – August 31
New York
- Glens Falls (Warren): July 1 – August 31
- Lake Placid (Essex): July 1 – August 31
- New York City (Bronx, Kings, New York, Queens, and Richmond): October 1 – December 31 and March 1 – September 30
- Saratoga Springs/Schenectady: July 1 – August 31
North Carolina
- Kill Devil Hills (Dare): June 1 – August 31
Oregon
- Bend (Deschutes): June 1 – August 31
- Eugene/Florence (Lane): June 1 – July 31
- Seaside (Clatsop): July 1 – August 31
Pennsylvania
- Hershey: June 1 – August 31
- Philadelphia: October 1 – November 30 and April 1 – September 30
Rhode Island
- Jamestown/Middletown/Newport: October 1 – 31 and June 1 – September 30
South Carolina
- Charleston (Charleston, Berkeley, and Dorchester): October 1 – September 30
- Hilton Head (Beaufort): March 1 – August 31
Tennessee
- Nashville (Davidson): October 1 – September 30
Utah
- Moab (Grand): October 1 – 31, March 1 – June 30, and September 1 – September 30
- Park City (Summit): October 1 – September 30
Vermont
- Burlington (Chittenden): October 1 – 31 and May 1 – September 30
- Manchester (Bennington): October 1 – 31 and August 1 – September 30
- Montpelier (Washington): October 1 – 31 and August 1 – September 30
Virginia
- Virginia Beach: June 1 – August 31
- Wallops Island (Accomack): July 1 – August 31
- Washington, D.C. Metropolitan Area (Cities of Alexandria, Falls Church, and Fairfax; counties of Arlington and Fairfax): October 1 – September 30
Washington
- Port Angeles/Port Townsend (Clallam and Jefferson): July 1 – August 31
- Seattle (King): October 1 – September 30
Wyoming
- Jackson/Pinedale (Teton and Sublette): October 1 – September 30
Why Per Diem Rates Matter
Per diem rates are used as a convenience for employers and workers—it’s a relatively simple way to substantiate business travel amounts.
Here’s why that matters. As noted earlier, per diem payments are not considered wages for federal income tax purposes, provided the payments are equal to or less than the federal per diem rate and the employee submits an expense report to the employer within a reasonable timeframe. That’s a good thing.
Not following the rules can result in a tax on employees for those payments—that’s not such a good thing. Keeping it simple makes it more likely that all parties will follow the rules.
Of course, employers don’t have to stick to the per diem rate. Employers can choose to pay less—that still falls within the guidelines. But if an employer pays more than the federal rate and there’s no substantiation (meaning records that meet IRS guidelines), the excess will be taxable to the employee.
That’s why having a baseline for reimbursement—with adjustments for those garden spots that are a bit more expensive—smooths out record-keeping a bit. It also provides the IRS (and its algorithms) with insight into whether employee payments for travel expenses are truly for travel expenses—or disguised compensation.
More Information
You can find the entire high-cost localities list, together with other per diem information, in Notice 2025-54. To find the federal government per diem rates by locality name or zip code, head over to the General Services Administration (GSA) website.
