Payroll News

Federal Per Diem Rate to Increase in Fiscal 2020

Aug. 12, 2019, 3:56 PM

The per diem rate for travel in the continental U.S. that is used to determine the tax-free limit for reimbursements is to increase in fiscal 2020, the General Services Administration said.

Effective Oct. 1, 2019, the standard per diem rate is to increase to $151 from $149 in fiscal 2019, the agency said Aug 8. The lodging allowance is to increase to $96 from $94, and the allowance for meals and incidental expenses is to remain unchanged at $55.

The per diem rate for an area is made up of allowances for lodging, meals, and incidental expenses. The rates are the maximum allowances to reimburse federal employees for expenses while on official travel in the continental U.S. Many private-sector employers use the per diem rate method to substantiate the tax-free reimbursing of employees for expenses incurred on business travel.

If the employer’s per diem rate is less than or equal to the federal per diem rate, the expenses can be deemed substantiated and do not qualify as taxable income to employees. If the employer’s per diem rate exceeds the federal rate, amounts paid in excess of the federal per diem must be substantiated by employees or treated as taxable income.

Fiscal 2020 is from Oct. 1, 2019, to Sept. 30, 2020.

To contact the reporter on this story: Michael Trimarchi in Washington at mtrimarchi@bloombergtax.com
To contact the editor on this story: Michael Baer at mbaer@bloombergtax.com