How to Calculate per-Diem in Usa

Per diem (Latin for "by the day") refers to the daily allowance paid to employees or travelers for expenses incurred while away from home. In the USA, per diem rates are established by federal and state governments to standardize reimbursements for lodging, meals, and other travel-related costs.

What is Per Diem?

Per diem is a standardized daily allowance used to reimburse employees or travelers for expenses incurred during business travel. It typically covers lodging, meals, and other incidentals. The rates are set by government agencies to ensure fair and consistent reimbursement across different locations.

Key Points:

Per diem rates vary by location and purpose of travel
Rates are typically set by federal and state governments
Used for official government travel and some private business travel
Does not cover all expenses - some costs may require separate reimbursement

How to Calculate Per Diem

The calculation of per diem involves several steps to ensure accurate reimbursement. Here's a step-by-step guide:

Determine the applicable per diem rate for your location and purpose of travel
Calculate the total travel expenses for the day
Subtract any actual expenses from the per diem rate
Reimburse the difference to the traveler

Per Diem Calculation Formula:

Reimbursement Amount = Per Diem Rate - (Actual Lodging + Actual Meals + Other Actual Expenses)

For example, if the per diem rate is $120 and you spent $80 on actual expenses, you would be reimbursed $40.

Federal Per Diem Rates

The federal government establishes per diem rates for official travel. These rates are based on the cost of living in different areas and are updated periodically. The rates are categorized by location and purpose of travel.

Location Type	Per Diem Rate (2023)	Notes
Washington, D.C.	$181.50	Includes all meals and lodging
New York City	$177.50	Includes all meals and lodging
Chicago	$165.50	Includes all meals and lodging
Los Angeles	$163.50	Includes all meals and lodging
Other Major Cities	$155.50	Includes all meals and lodging
Smaller Cities	$147.50	Includes all meals and lodging

These rates are subject to change and should be verified with the latest government publications.

State Per Diem Rates

Many states also establish their own per diem rates for official travel. These rates may differ from federal rates and are typically based on the state's cost of living. Some states require additional documentation or have specific rules for reimbursement.

Important Note: State per diem rates may differ from federal rates. Always check your state's official travel regulations for the most accurate information.

Example Calculation

Let's walk through a practical example to illustrate how per diem calculations work.

Scenario

An employee travels to New York City for a 3-day business conference. The federal per diem rate for New York City is $177.50 per day.

Day 1

Per diem rate: $177.50
Actual expenses: $120 (hotel $80, meals $40)
Reimbursement: $177.50 - $120 = $57.50

Day 2

Per diem rate: $177.50
Actual expenses: $150 (hotel $90, meals $60)
Reimbursement: $177.50 - $150 = $27.50

Day 3

Per diem rate: $177.50
Actual expenses: $130 (hotel $85, meals $45)
Reimbursement: $177.50 - $130 = $47.50

Total Reimbursement

$57.50 + $27.50 + $47.50 = $132.50

Total Reimbursement Formula:

Total = Σ (Per Diem Rate - Actual Expenses) for each day

FAQ

What expenses are covered by per diem?

Per diem typically covers lodging, meals, and other incidentals. However, some expenses like transportation, entertainment, or personal purchases may not be covered.

How often are per diem rates updated?

Federal per diem rates are updated annually. State rates may be updated more frequently depending on the state's travel regulations.

Can I use per diem for personal travel?

Per diem rates are primarily for official government travel. Personal travel typically requires separate reimbursement or documentation.

What if I exceed the per diem rate?

If your actual expenses exceed the per diem rate, you may need to pay the difference out of pocket unless additional funds are authorized.

Are there any exceptions to per diem rules?

Yes, some states and federal agencies have specific exceptions or additional requirements for per diem reimbursement.