News

Traveling for Work? How Per Diems Can Help Track Expenses

Alexander Bachuwa

June 20, 2019 • 9 min read

The cards we feature here are from partners who compensate us when you are approved through our site, and this may impact how or where these products appear. We don't cover all available credit cards, but our analysis, reviews, and opinions are entirely from our editorial team. Terms apply to the offers listed on this page. Please view our advertising policy and product review methodology for more information.

Quick summary

Per diem rates simplify business travel expense reporting by allowing travelers to claim a set government-determined allowance instead of tracking individual costs.
These rates cover meals, incidentals and, in some cases, lodging, with different rates for high-cost locations and international destinations.
Employees can be reimbursed using per diem rates, while self-employed individuals may only use per diems for meals and incidentals, not lodging.
Proper documentation—such as expense reports and receipts for non-per-diem items—is still required for tax compliance.

What to consider

Per diem rates vary by location and time of year, so travelers should check the specific rates for their destination.
Only expenses substantiated with an expense report and within federal per diem limits are non-taxable; excess reimbursements may be considered taxable income.
Travel paid with points or miles is not tax-deductible, and self-employed individuals must use actual lodging expenses rather than per diem rates.

What you'll miss from the article

A detailed breakdown of who qualifies for per diem use, common pitfalls and best practices for maximizing allowable business travel deductions.

Generated by AI with support from our editorial team.

The worst part of coming home from a business trip is often the expense report. You confront a pile of receipts in a desperate effort to put together a chronology of meetings, tips for taxi drivers and bellhops, lunches on the fly, breath mints after a lunch with too much garlic, screen cleaners for the laptop, etc.

Tracking travel expenses in order to get reimbursed or to deduct them from your taxes can be a huge hassle.

But there’s relief available in the form of a standard allowance, better known as “per diem.”

As a reminder, your travel expenses can be tax-deductible business expenses if they are “ordinary and necessary” expenses of traveling away from your home for your business or job. Those include transportation, lodging, and meals and incidental expenses (M&IE) such as tips.

Related: The Best Cards for Maximizing Your Employees’ Per Diem Meal Spending

Per Diem Advantages

The per diem ("per day") allows you to list a government-determined figure for some or all of those expenses on your expense report, rather than a long accounting of the actual, individual expenses.

The standard per diem rate in effect from Oct. 1, 2018, to Sept. 31, 2019, for travel within the continental US is $195 total (accommodation, meals and incidentals). The rate for just meal and incidental expenses is $60.

In addition, the IRS publishes special rates for more than 400 high-cost locations and even for more expensive travel times, meaning some locations are considered high-cost only during certain times of the year. Here’s a list of the high-cost locations and a searchable map to determine their allowances.

For international travel, the US Department of State establishes per diem rates for all foreign areas, including a maximum rate for lodging and a rate for meals and incidentals.

Exhange rate display bank outside — Much like exchange rates, international per diem rates are established for all foreign locations. (Photo by wx-bradwang / Getty Images)

Using per diems does not mean that you don’t have to keep any records or documentation at all. You still must prepare an expense report, showing the date, place, business purpose and business relationships that led to the expenses. If you use a per diem, list the allowance amount in the expense report instead of the actual expense. And you still must have receipts for items not covered by the per diem.

(The IRS defines business travel as travel for work that requires you to be away from your tax home for longer than an ordinary work day. Expenses incurred for a temporary work assignment away from your home for less than one year can also qualify as tax-deductible travel expenses.)

What Are Typical Tax-Deductible Business Expenses?

Typical tax-deductible business travel expenses include:

Travel by airplane, train, bus or car between your home and your business destination. However, if you travel on a free ticket as part of a frequent traveler or similar program, your cost is zero. Points-and-miles fans should note that you cannot deduct the estimated value of the miles you used.
Fares for taxis and Uber/Lyft or similar transport between the airport or train station and your hotel, the hotel and the work location, and from one customer to another, or from one place of business to another. If you are using a car, you can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking fees.

hailing taxi in city — For business travel expenses, like Ubers or taxis, those expenses can be deducted on your taxes. (Photo by Merethe Svarstad/EyeEm / Getty Images)

Shipping of baggage and work-related material, such as samples, between your regular and temporary work locations.
Meals, although business meals can only be deducted at 50% of the unreimbursed cost.
Lodging, including stays at Airbnb, can be deducted. However, if you are an independent contractor, you cannot use per diem. You would have to deduct the actual lodging expense. Again, if you are using points for a free hotel stay, this is not tax-deductible.
Incidentals such as tips, which is capped at $5 per day.

Who Can Use Per Diem Rates?

Employees

Per diem rates can be used to reimburse employees for travel expenses. Per diem rates are available for meals and incidentals and also for lodging. Companies usually reimburse their employees for these travel expenses. Previously, as an employee, you could deduct any unreimbursed expense. The new tax law, however, eliminated deductions for unreimbursed employee expenses for the tax years 2018 through 2025. This means only businesses and the self-employed can now deduct those expenses.

An employer can use a per diem rate to reimburse employees for combined lodging and meal costs, or for meal costs alone. As long as those per diem payments do not exceed the federal per diem rate and the employee provides an expense report, they are not taxable income. In general, expenses have to be “substantiated” with actual receipts or are “deemed substantiated” with a per diem rate no higher than the federal per diem rate. An unsubstantiated reimbursement higher than the federal per diem rate is considered taxable income.

Self-Employed

Self-employed people such as travel bloggers, copywriters, magazine editors, and others who travel often for work, can use per diems to deduct meals and incidental expenses from their taxes. They cannot use the per diem for lodging. It must be recorded as actual expenses with receipts, not per diem.

As an independent contractor or self-employed freelancer you are basically both the employer AND the employee. That does not let you off the hook, if you want to use the per diem for establishing tax-deductible expenses, for tracking certain expenses and preparing an expense report with dates, places, business purpose, etc. If you have your own company (such as an S Corp), then you should deduct the expenses directly from the business.

Temporary Nomad Versus Digital Nomad

Temporary digital nomads in global rotation programs like Remote Year might also qualify to deduct travel expenses and, therefore, to use per diems. However, full digital nomads without a home wouldn’t.

As an expatriate with a fixed home abroad, you can deduct expenses incurred by business travel. For example, if you live and work in Madrid and pay taxes to Spain, you can deduct travel expenses on your US tax return for work that requires you to be away from Madrid.

Expats on short-term assignments may receive per diem payments for the duration of the stay. If the intended stay is one year or more, however, the expat is living at the assigned location and cannot deduct assignment-related travel expenses.

Digital nomad backpacker computer train station — If you are a full-time, digital nomad without a home, you won't be able to take advantage of all the deductions possible. (Photo by kiszon pascal / Getty Images)

If you have more than one place where you live and work, then, generally, the place where you spend more time, or where most of your revenue is generated, is considered your tax home. For more nomadic expats, however, the key is “travel away from your home.” If you don’t have a home that you travel from and back to, you likely won’t be able to deduct your travel expenses.

Do’s and Don’ts of Using Per Diems for Business Travel

Using per diem rates can have advantages in many situations, if used correctly. However, per diems are not free money or tax deductions without any paperwork. If you are using per diems for business travel expenses, keep the following in mind:

Do

Only use per diems that do not exceed the location-specific federal rate to avoid tax issues.
Keep track of date, place, business purpose and business relationship with any party involved for your expense report. You need those records even when using per diem rates.
Prepare an expense report.
Check the per diem rates for your destination and compare with your expected actual cost to see which one is more beneficial.

Don’t

Forget to keep receipts of other expenses. Per diems only cover meals and incidentals and a maximum lodging rate. (Lodging is not covered by a per diem for the self-employed.) Transportation, shipping or other business-related expenses must be claimed separately, supported by receipts.
Deduct travel paid for with miles, points, etc. Those are not tax-deductible.
Combine lodging and M&IE rates. You cannot use an “unused” portion of one allowance and apply it to the other. For example, if your hotel is more expensive than the maximum lodging rate but your M&I expenses are below, you cannot apply part of the M&IE to your hotel bill.

Alexander Bachuwa is a New York attorney who focuses on consumer and international dispute resolution. For more information, visit the Bachuwa Law website or The Points Of Life, his travel blog. With additional reporting by Vincenzo Villamena, an expat tax CPA based in Medellin, Colombia who travels the world advising other expats on how to optimize their tax situation.

Great offers from our partners

See current offers Find your best card with CardMatch™

TPG featured card

American Express® Gold Card

TPG editor's rating

at American Express's secure site.
Terms & restrictions apply. See rates & fees.

Rewards rate

Rewards rate
Rate	Category
4X	Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
4X	Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
5X	Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App™.
3X	Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App™, or purchased directly from airlines.
2X	Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App™ and cruises booked and paid through AmexTravel.com.
1X	Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.

Intro offer

As High As 100,000 points. Find Out Your Offer.

Annual fee

$325

Regular APR

See Pay Over Time APR

Recommended credit

Excellent to Good

Pros + cons

Pros

Valuable dining and food-related credits
Flexible rewards with airline and hotel transfer partners
Multiple travel and purchase protections
No foreign transaction fees
Access to Amex Offers for additional savings (enrollment required)

Cons

Not as useful for those living outside the U.S.
Some may have trouble using Uber and other dining credits

More details

You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $8,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App™.
Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App™, or purchased directly from airlines.
Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App™ and cruises booked and paid through AmexTravel.com.
Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
Pay It® lets you tap in the American Express® App to quickly pay for small purchase amounts throughout the month and still earn rewards the way you usually do. Plan It® gives you the option to split up big purchases into equal monthly payments with a fixed fee. You’ll know upfront exactly how much you’ll pay.
$120 Dining Credit: Earn up to a total of $10 in statement credits monthly when you pay with the Gold Card at Grubhub (including Seamless), Buffalo Wild Wings, Five Guys, The Cheesecake Factory, and Wonder. This can be an annual savings of up to $120. Enrollment required.
$100 Resy Credit: Get up to $100 in statement credits each calendar year at over 10,000 qualifying U.S. Resy restaurants after you pay for eligible purchases with the American Express® Gold Card. That’s up to $50 in statement credits semi-annually. Enrollment required.
$84 Dunkin' Credit: Earn up to $7 in monthly statement credits after you pay with the American Express® Gold Card at U.S. Dunkin’ locations. Enrollment required.
$120 Uber Cash on Gold: Enjoy up to $120 in Uber Cash annually with your Gold Card. Just add your Card to your Uber account and you'll get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an Amex Card for your transaction.
Enjoy complimentary Hertz Five Star® Status benefits like skipping the counter at select locations, adding an additional driver at no additional cost*, and vehicle upgrades**. Benefit enrollment and Hertz Gold+ registration are required. *Additional drivers must meet standard rental qualifications and must be a spouse or domestic partner to qualify as complimentary. Other additional drivers subject to fees. **Benefits are subject to availability and vary by location. Additional Hertz program Terms and Conditions including age restrictions apply.
Book two nights or more with The Hotel Collection through AmexTravel.com or the Amex Travel App™ and receive a $100* credit towards eligible charges at over 1,400 upscale hotels worldwide. *Eligible charges vary by property.
Book your travel through the Amex Travel App™ with added peace of mind – backed by American Express® service and support. Only for American Express® Card Members.
Whenever you need us, we're here. Our Member Services team will ensure you are taken care of. From lost Card replacement to statement questions, we are available to help 24/7.
No Foreign Transaction Fees.
Annual Fee is $325.
Terms Apply.