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Managers of corporate travel budgets, do you hear the stampede approaching your office door? It’s your employees, clamoring to learn whether you’ll be increasing your per diem once the feds increase the nontaxable expense limit on Oct. 1, the start of the 2025 federal fiscal year.
Okay, so maybe we’re exaggerating a little. The federal government’s daily cap for nontaxable expenses on lodging will go from $107 to $110 (a 2.8% increase), the General Services Administration (GSA) announced in August. The cap for meals and incidental expenses will be $68, a $9 increase.
For employees headed to the bright lights of a big city, where hotels and dining are a bit more expensive, in September the Internal Revenue Service (IRS) announced increases to its caps for “high-cost localities,” defined as places where the per diem limit is above $272. The cap for travel to those areas is increasing $10, to $319, and the meals and incidentals portion will go up $12, to $86 per day. Those caps will take effect at the same time as the general per diem increases.
Fine print. Of course, your company doesn’t have to raise its per diem. And even if you peg yours to the federal cap the GSA sets, much of the time you’ll likelypay less than the $319 maximum for high-cost areas. That’s because the actual per diem limit varies by city and by which month your employee is traveling there.
The GSA’s cap is higher in Washington, DC, than in Chicago for most of the year, for example. And even the areas you’d think were always expensive aren’t considered high-cost every month of the year. That includes both DC and Chicago, and even New York City.
Per diem calculator. The GSA has a handy per diem calculator that gives you the daily limit for lodging, meals, and incidental expenses based on location, with results listed by month. (If you check the calendar before Oct. 1, make sure to select 2025 as the fiscal year in the drop-down menu.)