Federal Standard Per Diem Rates Increase for Fiscal Year 2018
Author: Rena Pirsos, XpertHR Legal Editor
August 22, 2017
The General Services Administration (GSA) has announced the per diem rates that apply to the lower 48 Continental United States (CONUS) for the federal government's fiscal year 2018, which begins October 1, 2017.
Per diem rates are flat, daily dollar amounts that are divided into lodging, meal and incidental expenses (M&IE). They represent the maximum amount that federal employees may receive in travel reimbursements when they travel on official business. Per diem allowances are not limited to federal government employers. Any employer may use these rates to reimburse an employee who travels away from home overnight, in lieu of reimbursing the employee's actual expenses.
For a private employer, per diem allowances that are equal to or less than the GSA's rates for the locality of travel are excluded from an employee's taxable income. In addition, an employee who receives a per diem allowance does not need to submit substantiation for the expenses covered by the allowance. The employee, however, must substantiate the time, place and business purpose of the travel. Per diem allowances that exceed the federal rates are treated as taxable wages subject to employment taxes to the extent of the difference between the allowance and the federal rate.
Based on the GSA's calculations, the standard lodging amount will increase to $93 (from $91) a night.
Most of the CONUS locations are covered by the standard per diem rate of $144 (a combination of $93 for lodging and $51 for M&IE). This represents a small increase of $2 from the fiscal year 2017 rates of $91 and $51, respectively. In fiscal year 2018, 332 Non-Standard Areas (NSAs) have per diem rates that are higher than the standard CONUS rate.
The CONUS per diem rate for an area is actually three allowances - lodging, meals and incidentals. Most of the CONUS (approximately 2600 counties) is covered by the standard CONUS per diem rate of $144 ($93 lodging, $51 M&IE).
For all locations within CONUS not shown on the GSA's list, the lodging per diem rate is $93, the M&IE rate is $51 and the combined maximum standard per diem rate of $144 applies. The combined rates for the listed locations range from a low of $144 (off-season) for several locations, to a high of $424 (peak season) for Aspen, Colorado.
The GSA provides a mobile app that employers and employees can use to look up per diem rates.
In addition, the GSA now allows federal employees to use transportation network companies - Uber, Lyft or a similar service - if it would be advantageous to the government to do so. The determination of whether use of a transportation network company is advantageous is generally based on efficiency and cost effectiveness. Private employers that have not already done so may include transportation network companies in their travel reimbursement policies as well.
There are no new NSA areas for fiscal year 2018, but some areas are modified. In fiscal year 2018, the following 14 NSA locations move into the standard CONUS rate category:
- Redding, California;
- Bonner's Ferry/Sandpoint, Idaho;
- Cedar Rapids, Iowa;
- Watertown, New York;
- Dickinson/Beulah, North Dakota;
- Youngstown, Ohio;
- Enid, Oklahoma;
- Mechanicsburg, Pennsylvania;
- Scranton, Pennsylvania;
- Laredo, Texas;
- McAllen, Texas;
- Pearsall, Texas;
- San Angelo, Texas; and
- Gillette, Wyoming.
Other Per Diem Rates
The IRS also provides a list of "high-cost" and "low-cost" localities that an employer may use in lieu of the GSA's per diem rates. The IRS's rates include special M&IE rates for the transportation industry and a rate for the incidental-expenses-only deduction. These rates have not yet been released for fiscal year 2018.
The Department of Defense updates the per diem lodging and M&IE rates for travel in non-foreign areas outside the continental US (OCONUS), including Alaska, Hawaii, Puerto Rico and the US territories. Revisions to these rates are made in Civilian Bulletins throughout the year and announced in the Federal Register.
The Department of State updates and publishes the per diem lodging and M&IE rates for travel in foreign areas. These rates are not announced in the Federal Register.