Per Diem Rates Explained (2026): Business Travel Meals and Lodging

The standard federal per diem rate for 2026 is $178 per day: $110 for lodging plus $68 for meals and incidental expenses (M&IE). Per diem lets you deduct business-travel meals at that fixed daily rate instead of saving every receipt — but if you're self-employed, you can only use it for meals, not lodging, which you deduct at actual cost. FY 2026 rates run through September 30, 2026; GSA's FY 2027 rates take over on October 1.

Key takeaways:

• Standard CONUS rate for FY 2026: $110 lodging + $68 M&IE = $178/day (GSA held rates flat vs FY 2025)
• IRS high-low method (Notice 2025-54): $319/day in high-cost localities, $225 everywhere else; M&IE-only portions are $86 and $74
• Self-employed: M&IE per diem only — lodging is deducted at actual cost with receipts (Publication 463)
• Only 50% of the meal portion is deductible; departure and return days count at 75% of the M&IE rate
• A "high-cost locality" is any area with a federal per diem of $272 or more — the list is in Section 5 of Notice 2025-54

Save this cheat sheet — the 2026 per diem numbers in one image.

What Per Diem Actually Is

Per diem is Latin for "per day." In tax terms, it's a fixed daily amount the government sets to cover the cost of business travel, so you don't have to track every individual expense. Instead of saving the receipt for a $14 airport breakfast and a $31 dinner, you claim the published rate for the city you're in and the day you're there.

A full per diem splits into two parts:

• Lodging — what a hotel room costs in that location.
• M&IE — meals and incidental expenses. "Incidentals" means small costs like tips to hotel staff and baggage handlers.

The federal rates come from the General Services Administration (GSA), which publishes a per diem rate for every location in the continental United States (the CONUS rates) each fiscal year. A "standard" rate applies to most of the country, and several hundred higher-cost cities get their own elevated rates. The IRS then issues an annual notice that lets businesses and the self-employed use these same federal rates to substantiate travel deductions on a tax return.

The appeal is simple. Per diem replaces receipt-by-receipt tracking with one number per day. For anyone who travels for work, that's hours of bookkeeping you never have to do. This fits inside the broader rules covered in our business travel deduction guide — per diem is the meals-and-lodging shortcut within those rules.

The 2026 GSA Standard Rates

GSA sets per diem rates by federal fiscal year, which runs October 1 through September 30. The rates in effect for most of 2026 come from fiscal year 2026, which began October 1, 2025. For FY 2026, GSA held the standard rates flat — no increase over FY 2025.

Update (August 2026): GSA typically announces the next fiscal year's rates in mid-to-late August. FY 2027 rates take effect October 1, 2026 — if you're booking fall travel, the FY 2026 numbers below apply only through September 30. Check the GSA per diem lookup for the FY 2027 figures once they post; the IRS follows with its own updated special-rates notice (usually in September) that resets the high-low amounts.

The $110 lodging and $68 M&IE figures apply to any U.S. location that doesn't have its own published rate. Hundreds of higher-cost cities — think San Francisco, New York City, Boston — carry rates above the standard. M&IE for those locations falls into tiered amounts of $68, $74, $80, $86, or $92 per day, depending on the city.

Here's how the M&IE rate breaks down by meal, which matters if you skip a meal that was provided to you (a conference lunch, for example) and have to reduce your claim:

To find the exact rate for a specific city, search the destination on the GSA per diem lookup tool. The rate you'll get is the one tied to the county your destination sits in, for the dates you're traveling — some resort cities have higher rates only during peak season.

The IRS High-Low Method

Looking up a different rate for every city gets tedious if you travel to many places. The IRS offers a simpler alternative called the high-low substantiation method. Instead of hundreds of city rates, you use just two: one for "high-cost" localities and one for everywhere else in the continental U.S.

For the period beginning October 1, 2025 (IRS Notice 2025-54), the high-low rates are:

A "high-cost locality" is any location with a federal per diem rate of $272 or more. The IRS publishes the full list inside Notice 2025-54 — it includes places like Manhattan, San Francisco, Aspen, and many resort towns during their busy seasons.

The high-low method is mainly used by employers reimbursing employees, because it simplifies expense processing across many trips. There's a consistency rule: an employer generally has to use the high-low method for an employee for the entire calendar year, not switch between high-low and city-by-city rates mid-year for the same person.

Which Cities Count as IRS High-Cost Localities

A high-cost locality is any area where the federal per diem rate is $272 or more for at least part of the year. The IRS publishes the full list in Section 5 of Notice 2025-54; for the year that began October 1, 2025, the list is unchanged from the prior year's notice.

Year-round high-cost localities (listed October 1 through September 30) include:

• Los Angeles, San Francisco, San Diego, Santa Barbara, Monterey, and the Sunnyvale/Palo Alto/San Jose area in California
• Aspen, Telluride, and Vail, Colorado — high-cost all year, not just ski season
• Washington, D.C. (including Alexandria, Arlington, and the Montgomery/Prince George's suburbs)
• Boston/Cambridge and Martha's Vineyard, Massachusetts
• Key West, Florida; Charleston, South Carolina; Nashville, Tennessee; Park City, Utah

The rest of the list is seasonal, and the windows are not always what you'd guess. New York City is high-cost every month except January and February. Chicago and Philadelphia drop off the list from December through March. Denver is out from November through March, Miami qualifies December through May, and Atlanta only January through March. The ski entries that are seasonal — Breckenridge, Steamboat Springs, South Lake Tahoe, Mammoth Lakes — run December 1 to March 31, while summer resort entries like Nantucket, Bar Harbor, and Ocean City, Maryland cover the June-to-September stretch. If your trip dates fall outside a locality's listed window, the $225 "all other localities" rate applies — match your travel dates against the month ranges in the notice rather than assuming.

The list matters even if you never use the high-low method: it's a quick way to spot cities where the regular GSA city rate will run well above the $178 standard, which usually means a bigger M&IE deduction if you look up the city-specific rate.

How the Self-Employed Use Per Diem (The Lodging Catch)

This is the rule that catches most freelancers and single-member LLC owners, so read it twice. At Anna Money we watched both failure modes across 60,000+ small businesses: owners who lost half their meal receipts and gave up on the deduction entirely, and owners who treated per diem as tax-free cash for days they never traveled.

If you're self-employed, you can use the federal per diem rate for your meals and incidental expenses — but not for lodging. For your hotel, you deduct your actual cost. IRS Publication 463 is explicit: "there is no optional standard lodging amount similar to the standard meal allowance" for the self-employed. You keep the hotel receipt and deduct what you actually paid.

So as a sole proprietor or single-member LLC owner, your travel deduction looks like this:

• Lodging: actual cost, from your hotel receipts.
• Meals: the federal M&IE per diem rate for each city and day (or your actual meal costs, if you'd rather track them).
• Incidentals: included inside that M&IE rate.

Using the M&IE per diem for meals is still a big win. You skip every restaurant receipt and just apply the daily rate. You only need to prove you were traveling for business — the time, place, and business purpose of the trip — not the price of each plate of food. This pairs directly with the rules in our business meal deduction guide, which covers what counts as a deductible meal in the first place.

Employees of your own S corporation are in a different position. An S corp can reimburse its employee-owner under an accountable plan using the full per diem (lodging plus M&IE), and that reimbursement is tax-free to the employee and deductible to the company. That's one of the practical perks people weigh when they look at how an S corp election changes their taxes.

The 50% Meal Limit Still Applies

Per diem doesn't get you around the 50% limit on business meals. Whether you deduct your actual meal costs or use the M&IE per diem rate, only 50% of the meal portion is deductible on your return.

The incidental slice is treated differently. The $5-per-day incidental portion inside M&IE is fully deductible — it's the meals that get cut in half. In practice, most software and tax preparers apply the 50% reduction to the meal-and-incidental total when you use per diem, which is the conservative and standard approach.

Here's the math on a single standard travel day: the full-day M&IE allowance is $68, and the deductible portion after the 50% meal limit is $68 × 50% = $34. You record a $68 daily allowance, but only $34 reduces your taxable income.

The takeaway: per diem simplifies your recordkeeping, but it doesn't change the 50% haircut that applies to nearly all business meals.

First and Last Day: The 75% Rule

You're rarely traveling for a full 24 hours on the day you leave or the day you return. The IRS accounts for this. On the first and last day of a trip, you claim only 75% of the M&IE rate — three-quarters of a full day's meals.

Publication 463 lets you use "3/4 of the standard meal allowance" for the days you depart and return, or any other method you apply consistently in line with reasonable business practice. The 75% convention is the simplest and the one most people use.

For the standard $68 M&IE rate, that's $68 × 75% = $51 on each travel day, versus $68 for a full day.

So a trip that spans your departure day, two full days in the middle, and a return day uses $51 + $68 + $68 + $51 for M&IE before the 50% meal limit is applied.

The Incidental-Expenses-Only Rate

There's a narrow case worth knowing. If you travel for business but don't pay for any meals — say a conference covered every meal — you can't claim the M&IE rate, because you had no meal cost. But you can still claim a flat $5 per day for incidental expenses, under the incidental-expenses-only method in IRS Notice 2025-54.

This $5-a-day amount is not subject to the 50% meal limit, because it isn't a meal. It's a small deduction, but it's clean and fully deductible when meals are otherwise provided.

Worked Example: A Three-Day Conference Trip

Maria is a self-employed marketing consultant. She flies to a three-day conference in a standard-rate city, paying for her own hotel and meals. Here's how her per diem deduction comes together.

The trip:

• Day 1 (Tuesday): flies in, conference starts — departure day
• Day 2 (Wednesday): full conference day
• Day 3 (Thursday): full conference day
• Day 4 (Friday): conference wraps, flies home — return day
• Hotel: 3 nights at $140/night actual cost = $420
• City: standard CONUS rate, so M&IE is $68/day

Step 1 — Lodging (actual cost, no per diem for the self-employed): 3 nights × $140 actual = $420 lodging deduction, fully deductible.

Step 2 — M&IE per diem, with the 75% first/last-day rule:

Step 3 — Apply the 50% meal limit to M&IE: $238.00 × 50% = $119.00 deductible meals and incidentals.

Step 4 — Total travel deduction: $420.00 lodging + $119.00 meals and incidentals = $539.00.

Maria deducts $539 for the trip, and she only had to keep her hotel receipt and proof that the trip was for business. No meal receipts, no adding up coffee runs. If she'd traveled to a high-cost city with a $92 M&IE rate instead, her meal allowance would have been meaningfully higher.

Note what didn't change: the lodging is her real cost, and the 50% meal limit still cut her M&IE in half. Per diem saved her the receipt-tracking, not the limit.

Recordkeeping You Still Need

Per diem reduces paperwork — it doesn't eliminate it. Even using the M&IE rate, you still have to substantiate the trip itself. Keep:

• Dates of travel — when you left and returned.
• Destination — the city, which determines your rate.
• Business purpose — why the trip was a business trip (the client, the conference, the job site).
• Lodging receipts — if self-employed, you need these because lodging is deducted at actual cost.

A travel log or even a calendar with trip notes is enough to show the time, place, and business purpose. The whole point of per diem is that you don't need the meal receipts on top of that. Logging each trip under a clear travel category keeps this tidy — see how we group it in our business expense categories guide.

These travel deductions also lower your net self-employment income, which feeds directly into your self-employment tax. Every legitimate dollar of travel deduction reduces both your income tax and the 15.3% SE tax on that profit.

Per Diem vs. Actual Expenses: Which to Use

You can choose per diem for meals or track actual meal costs — but you have to pick one method per trip and apply it consistently. Here's how to decide:

For most service-business owners and freelancers who travel a handful of times a year, the M&IE per diem wins on simplicity, and it often produces a deduction at least as large as the receipts would.

Common Mistakes to Avoid

Using per diem for lodging when self-employed. The single most common error. Sole proprietors and single-member LLC owners deduct actual lodging cost — there's no standard lodging per diem for you. Only employer reimbursements can use the full lodging-plus-M&IE per diem.

Forgetting the 50% meal limit. Per diem feels like a flat allowance, so people deduct the whole M&IE amount. Only half the meal portion is deductible. The $5 incidental slice is the exception — it's fully deductible.

Skipping the 75% first/last-day reduction. Claiming a full day's M&IE on your travel days overstates the deduction. Departure and return days get 75% of the rate.

Treating per diem as untaxed pay. For a business owner, per diem isn't cash you pocket — it's a deduction method. You can only claim it for days you were actually traveling away from home for business.

Using the wrong city or season. Rates are tied to the destination county and sometimes the time of year. Pulling the standard $68 when you traveled to a high-cost city in peak season shortchanges you; the reverse overstates the claim.

Mixing methods mid-trip. Pick per diem or actual meal costs for a given trip and stick with it. Don't claim per diem on day one and receipts on day two of the same trip.

Track Travel Deductions Automatically: How Jupid Helps

Per diem solves the meal-receipt problem, but you still have to know which transactions belong to a trip, keep the lodging cost straight, and tag the business purpose. That's exactly the kind of ongoing bookkeeping that slips when you're busy running the business.

Jupid is an AI accountant that lives in WhatsApp and iMessage. Connect your bank account, and Jupid pulls in your transactions and auto-categorizes each one — your hotel charge, your airfare, your client dinner — into the right account with 95.9% accuracy. When a charge is ambiguous, you settle it in a quick chat: "that hotel was the Austin conference," and it's filed. Over time, Jupid learns how you categorize, so recurring travel costs land in the right place automatically.

That means when you're deciding between per diem and actual costs at year-end, your travel spending is already organized and your lodging receipts are tied to the right trip. You can ask in plain language — "how much did I spend on business travel this quarter?" — and get an answer in seconds, instead of digging through statements. Jupid also handles automatic tax filing built on numbers that already line up with your categories.

Per diem keeps the meal math simple. Jupid keeps everything around it organized. Try Jupid and let the bookkeeping run itself.

Action Checklist

• Confirm the trip qualifies as business travel away from your tax home
• Look up the destination's FY 2026 GSA rate (standard M&IE is $68/day)
• If self-employed, deduct lodging at actual cost — keep the hotel receipt
• Apply the M&IE per diem for meals (or track actual meal costs)
• Use 75% of the M&IE rate on your departure and return days
• Reduce the meal-and-incidental total by the 50% meal limit
• Use the $5/day incidental-only rate if all meals were provided
• Log trip dates, destination, and business purpose for your records
• Pick one method per trip — per diem or actual — and stay consistent

Sources

• GSA — Per Diem Rates (FY 2026)
• GSA — M&IE Breakdowns
• GSA — FY 2026 CONUS Per Diem Rates News Release
• IRS — Notice 2025-54, 2025-2026 Special Per Diem Rates
• IRS — Publication 463, Travel, Gift, and Car Expenses
• IRS — Topic No. 511, Business Travel Expenses

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This guide is for general educational purposes and does not constitute tax, legal, or accounting advice. Per diem rates change each federal fiscal year, and rules vary by business structure and travel circumstances. Verify current rates on gsa.gov and the latest IRS per diem notice, and consult a qualified tax professional before claiming travel deductions on your return.