October 10, 2017
In August, the General Services Administration (GSA) issued its annual update on federal maximum per diem rates. These new rates pertain to locations within the continental United States known as CONUS. This includes the lower 48 states.
Before we go into detail about the new rates, let’s do a little refresher.
Per Diem: A Latin word that translates to per day, or for each day. In this article, per diem is being discussed as the daily allowance employees are paid and reimbursed for when they travel for work. Common expenses covered under per diem rates include:
Another simple way to put it: It’s the amount of money an employee is able to spend per day on a business trip, attending conferences and events related to work and traveling to work away from the home office. Think of it as an allowance. However, it’s important to note the per diem rate doesn’t include the cost of transportation to the site, such as flights or driving. Those costs are usually paid separately by the employers.
So, let’s get back to the main point: These rates are changing, and if you or your employees travel for work, it’s important to know them and stay in compliance.
The new FY18 rates apply to work travel on or after Oct. 1, 2017. If the per diem allowance given to an employee is equal to or less than the federal rates, the allowance is excludable from income tax; those over the federal rates are subject to employment taxes.
Let’s take a look at what FY18 per diem rates have to offer.
The first takeaway to note is the CONUS meal and incidental expense (M&IE) rate hasn’t changed—it’s staying at $51. The M&IE rates for non-standard areas (areas still within CONUS which have different rates for travel) will also stay the same. However, all locations in CONUS that don’t appear on the non-standard area list will have an increase in the lodging per diem rate. This has gone up from $91 to $93.
There are also some changes to the non-standard areas list. While no new locations were added, there were 14 locations removed for FY18. These removed locations are now considered part of the regular CONUS, and follow CONUS standard rates. They include:
You might also be wondering about rates in places that aren’t part of the CONUS, such as Alaska, Hawaii or even Puerto Rico. If your employees are lucky enough to travel to Hawaii for work, it’s important to note these rates are not updated annually, but rather irregularly.
The Department of State steps in and updates per diem rates for foreign travel, but also on an irregular schedule. To find these rates, as well as the CONUS rates, be sure to check out the GSA website.
In the meantime, if you’re struggling to understand how much to reimburse your employees for their travels, we’d be happy to help!