IRS diaries 2025: Key business travel allowances

The per diem allows employees or the self-employed to keep their business travel expenses. People traveling on business should know the per diem rates so that they get the correct compensation based on deductible expenses. The article covers everything you need to learn about the per diem tax rate and your per diem calculation.

Daily wage rates of the Tax Administration in 2025

.Per diem is a compensation paid by the Tax Administration to employees or employers when they travel for business expenses, it is an amount instead of their actual travel expenses.

Business travelers should know about per diems because they eliminate the need to report every expense. The standard daily allowance includes the following travel expenses that taxpayers can incur for their necessary and regular business trips:

• Accommodation
• Meals and incidentals

The IRS also has special per diem rates for expensive areas of the US, but first, let’s look at the standard per diem rates for the continental United States, which includes the 48 contiguous states and the District of Columbia. These are the standard daily wages for 2025:

• Maximum rates for lodMrthe price is 110 dollars
• The maximum per diem for M&IE is $68

So the standard rate for people traveling to the continental US increases for 2025 accommodation from $107 to $110 and for M&IE from $58 to $68. Employees should understand that the per diem varies because companies can decide their own rates for business travel expenses.

Locations moved to CONUS standard category for 2025 per diems

For FY 2025, non-standard area (NSA) per diem rates are higher than normal rates. However, the IRS has made some changes to the areas, as for 2025 NSAs from 2024 have been moved to the regular CONUS category, meaning they will receive an allowance based on the standard rate. Here are the locations moved to the CONUS category:

• Ft. Wayne, IN
• Mentor, OH
• Waco, Texas
• Canton, OH
• Warwick, RI/East Greenwich
• Wisconsin Dells, WI

Special per diems of the tax administration in 2025

As we mentioned, the IRS has special per diems for travel to high-cost locations. The IRS uses the high-low proof method to calculate per diems for such business trips. According to the notification of the Tax Administration, special per diems for 2025 for trips to places with high costs:

• GreetingMrh-cost local annual rates are $319, where $225 is the low price paid for meals.
• Per diem for M&IE is $86 for travel to high cost locations.

Meals and incidentals including business travel expenses are:

• room service
• All meals
• Fees and tips paid for services to waiters, porters or others.
• Washing, dry cleaning and ironing

Per diems may vary by location, so employees should check rates for the areas or localities where they spend the night. Employers pay ¾ of the standard rate for the first and last day of the employee’s stay and travel.

Prices for accommodation and M&IE can be combined depending on the location they are traveling from. The 2025 per diem is in effect for travel that takes place on or after October 1, 2024, or that travels outside of or after October 1, 2024.

Locations included in the complex location for per diems in 2025

According to a notice from the IRS, the US Civil Service Administration has added to the list of high-cost locations that every employee who travels frequently should know, such as:

• Burlington, Vermont
• Mammoth Lakes, California
• South Lake Tahoe, California
• Los Angeles, California
• Palm Springs, California
• Boise, Idaho
• Bend, Oregon
• Coeur d’Alene, Idaho

What should you include in your business expense report?

The employee should submit a report on the expenses of the official trip to the employer within 60 days of the trip. If the employer does not report the expenses on time, the compensation will become taxable to the employee.

Employees should include the following information in the report to secure their business expenses:

• You should include the purpose of the business trip
• You need to specify the place and date from the day of travel to the last day of travel
• You should include proof of accommodation when using per diems for meals only.

Is the per diem amount taxable?

According to the guidelines of the Tax Administration, if you meet the following conditions, the daily allowance will be taxable for employees:

• When you do not report the expenses of the official trip to the employer within 60 days
• When per diems are paid in excess of the standard federal rate established for per diems
• When you submitted a business expense report that does not include the exact date, time, amount, place and purpose of the trip.
• If the employer already gives the employee a lump sum for business trips, the employee does not need to submit such a report.

If your payment meets the above conditions, your payment will be taxable under the IRS code because the payment will be considered a salary. Employers can deduct 50% of your daily allowances for M&IE and accommodation payments can also be deducted if they are below the daily allowance limit.

Self-employed individuals should know that per diems are different for them as they only include meals and incidentals, but they can only receive 50% of the costs.

With the 2025 rates finalized by the US General Service Administration, employees should understand the per diem rates to keep their business travel expenses from their employer, especially those who travel frequently.