The government sets maximum regional per diem rates that can be allotted to employees without companies having to treat the per diem as extra wages. Since wages are subject to income tax and employment tax, it is worthwhile to stay under this limit.
Be sure to keep an eye on the per diem amounts for your employees’ destinations throughout the year. It is sometimes not enough to check at the beginning of each year since January is not the only time the rates are adjusted. The General Service Administration (GSA) sets these rates and they have changed the per diem allotments for areas in Alabama, California, Illinois, Missouri, New York, and Texas as recently as this past March.
Given this information, how do you know what your per diem rate should be? Visit the GSA website to see the full list. The tax code differs by state and city, so it’s worth finding out exactly what applies to your company’s travel needs. Having the information now instead of waiting until tax time can make all the difference.