When your workers journey for work, you may contemplate masking a few of their travel-related bills. To do that, you possibly can provide per diem pay.
You’ve gotten a few choices with regards to reimbursing workers for enterprise journey prices. Learn on to be taught in regards to the IRS per diem charges and when and how one can use the totally different charges.
What are the IRS per diem charges?
Earlier than we dive into the present IRS per diem charges, you might want to reply the query, What’s per diem?
Per diem is a every day allowance you give workers for travel-related bills. With per diem pay, you give workers a set greenback quantity to cowl issues like lodging, meals, and incidental bills (e.g., ideas for workers). In some circumstances, per diem may be restricted to simply masking meals and incidental bills (M&IE). You can’t give workers per diem pay to cowl transportation bills or mileage reimbursement.
You may present per diem upfront earlier than your workers journey for enterprise. Or, you possibly can reimburse them after the enterprise journey.
You aren’t required to supply per diem to workers. Nevertheless, per diem pay provides workers the prospect to journey for enterprise with out paying for bills out of pocket.
Authorities per diem charges change yr to yr relying on IRS Publication 1542. Charges are up to date annually and go into impact on October 1. The Normal Providers Administration (GSA) offers present, previous, and upcoming nationwide per diem charges.
Charges can fluctuate by location and normally enhance in dearer components of the nation, reminiscent of large cities (e.g., New York Metropolis).
There are two methods you possibly can decide per diem charges, together with the:
- Normal per diem charge technique
- Excessive-low technique
Normal per diem charge technique
The usual per diem charge technique modifications primarily based on the locality you ship the worker. In case your worker is touring throughout the Continental United States (CONUS), the GSA offers per diem charges for sure cities.
The 2024 commonplace per diem charge is $166 per day. This consists of $107 for lodging and $59 for meals and incidental bills. This charge covers roughly 2,600 counties throughout CONUS.
On the primary and final day of an worker’s journey, you solely have to pay 75% of the usual charge for M&IE.
Try the GSA’s web site for extra details about commonplace charges.
Excessive-low per diem technique
Along with the usual charge technique, the IRS additionally permits you to use a high-low technique.
The high-low per diem technique makes use of one charge for high-cost localities and one other for different cities in CONUS that aren’t thought of high-cost.
Charges for the high-low technique change annually. Look out for brand new high-low charges yearly.
The 2024 high-low charges embody:
- $309 per day (together with $74 for M&IE) for high-cost localities
- $214 per day (together with $64 for M&IE) for CONUS cities
Use the speed of $309 per day if an worker is touring to a high-cost space, like New York Metropolis. You may evaluation Discover 2023-68 for different cities which are thought of to be high-cost.
If the locality just isn’t high-cost, use the speed of $214 per day for CONUS cities.
Normal charge instance
Once more, the usual per diem charge is $166 ($107 for lodging and $59 for meals and incidental bills). Remember the fact that you solely must pay 75% of the usual charge on the worker’s first and final day of journey for M&IE.
Say your worker travels to Cameron, Texas for enterprise. As a result of Cameron follows the usual charge, you reimburse your worker $107 for every evening spent in Texas for lodging (2 nights), in addition to $59 per day for meals and incidental bills (3 days).
Your worker spends three days in Texas for the journey. Keep in mind, you solely must pay the worker 75% of the usual charge on the primary and final day of journey for M&IE. This implies you’ll solely have sooner or later the place you pay your worker the total quantity for M&IE.
Reimburse your worker $361.50 utilizing the usual charge. Try a breakdown of the per diem bills beneath.
$107 for lodging X 2 nights = $214
$59 for M&IE X 1 day = $59
$59 X 0.75 X 2 days (first and final day) = $88.50
Whole per diem pay = $361.50 ($214 + $59 + $88.50)
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This text has been up to date from its authentic publication date of March 2, 2020.
This isn’t supposed as authorized recommendation; for extra data, please click on right here.
