global Tax Per Diem Rates 2026–2027: What Employers Need to Know Before Updating Their Travel Policies September 29, 2026 The IRS and GSA update federal per diem rates each year. Learn the 2026–2027 per diem rates, what changed from last year, how per diem payments are taxed, what employees need to document, and what employers should review before updating their travel policies. Quick Takeaways The 2026–2027 special federal per diem rates will generally apply to travel beginning October 1, 2026.High-low rates increased: The high-cost locality rate increased from $319 to $329, while the rate for other localities increased from $225 to $230. Per diem amounts depend on the travel location and whether the locality qualifies as high-cost.Per diem isn't automatically tax-free: Employers must satisfy the requirements of an accountable plan.A new federal rate is a good reason to review reimbursement limits, documentation requirements, partial-day rules, and payroll procedures. 2026–2027 per diem rates: What's changed?The federal government's new fiscal year begins October 1, making that date important for employers with business travelers.For October 1, 2026 through September 30, 2027, the applicable rates will be:Per Diem Category2025–2026 Rate2026–2027 RateChangeHigh-cost locality — lodging, meals and incidental expenses$319$329+ $10Other locality — lodging, meals and incidental expenses$225$230+ $5M&IE — high-cost locality$86$86No changeM&IE — other locality$74$74No changeIncidental expenses only$5$5No changeTransportation industry M&IE — CONUS$80$80No changeTransportation industry M&IE — outside CONUS$86$86No changeWhy it mattersBusiness travel can quickly become an administrative headache. Employers have to balance employee convenience, accurate expense reporting, tax compliance, and the rising cost of travel. “Per diem rates can simplify that process by providing a standardized way to reimburse employees for certain travel expenses without requiring employees to submit receipts for every meal or lodging expense. Employers need to understand how the rates work, what documentation employees must provide, how partial travel days are handled, and when a per diem payment could become taxable compensation.” - Mitchell Halpern What are per diem rates?Per diem rates are standardized daily amounts that employers can use to reimburse employees for certain business travel expenses.Rather than reimbursing every actual meal, incidental expense, or lodging cost, an employer can establish a per diem policy that provides employees with a predetermined allowance based on where they travel.The federal per diem system generally covers:LodgingMeals and incidental expenses (M&IE)Incidental expenses only, in certain circumstancesDon't forget: location mattersOne of the most common mistakes employers can make is applying the same per diem rate to every business trip. Rates can differ substantially by location. Employers should verify the applicable locality rather than relying on an employee's home office location or assuming that every city in a state has the same rate.The GSA's per diem lookup tool provides locality-specific federal rates for travel within the continental United States (CONUS). Employers using the high-low method should also review the IRS's annual list of high-cost localities.Are per diem payments taxable to employees?Generally, properly administered per diem reimbursements can be excluded from an employee's wages when they are paid under an accountable plan and the applicable requirements are satisfied.This is an important distinction: the federal per diem rate alone does not make a payment tax-free.Review your travel policy nowOctober 1 is a helpful deadline for employers to review whether their travel reimbursement policy still reflects how employees actually travel.Consider reviewing:1. Your reimbursement rates- Are your company rates aligned with the federal rates you intend to use? If you reimburse below the federal rate, make sure employees understand the company's policy.2. Your high-cost locality list- If your company uses the high-low method, update the list of high-cost locations when the new IRS guidance is released.3. Your documentation requirements- Confirm that expense reports capture the information necessary to establish the time, place and business purpose of travel.4. Your first and last day rules- Make sure your payroll or expense system correctly handles reduced M&IE amounts for partial travel days.5. Your excess reimbursement procedures- If an employee receives more than the amount properly substantiated under the applicable rules, your policy should explain when and how excess amounts must be returned.6. Your payroll procedures- Review how your payroll team handles reimbursements that don't satisfy accountable-plan requirements. Payments treated as nonaccountable can become taxable wages and may be subject to employment taxes.7. Your employee communications- Even a well-designed travel policy can create problems if employees don't understand it. Consider providing a simple guide explaining which expenses are covered, what documentation is required, and how to report travel.
