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What is Per Diem?

Every fiscal year the IRS releases new per diem rates. The rates are for business travel. When an employee travels, a boss has two options on how to reimburse the employee. The first being based on receipts and an expense report and the second being the use of per diem rates.

There are Three Parts to Per Diem Rates

The first part is called the special transportation industry meal and incidental expenses (M&IE). Special M&IE is for taxpayers in the transportation industry. The rates are $66 and $71 per day depending on where you are traveling in the United States.

The second is for incidental expenses. This rate is for tipping and fees. It is set to $5 per day worldwide.

The last component of the rates is for high-cost cities and locations. For more expensive places the rate is either $200 or $297 per day depending on the location.

Fun Fact

Vancouver, Washington is a high-cost locality for a portion of the year.


Additionally, get a more in-depth definition of per diem rates from Don’t Mess With Taxes.

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