Per Diem Allowance: Daily Expense Allowances for Remote Work Travel

What Is a Per Diem Allowance?

A per diem allowance provides employees with a fixed daily amount to cover work-related expenses without requiring detailed receipts or expense reports. The concept originated in government and large corporate settings to simplify travel expense management and has evolved to address the unique needs of remote and distributed teams.

For remote workers, per diem allowances most commonly apply to situations where employees need to work outside their normal home office environment. This includes company retreats, team gatherings, client meetings, conference attendance, temporary assignments in different cities, or periods requiring coworking space usage.

The fundamental principle of per diem is simplicity: instead of tracking every meal, taxi ride, and incidental expense, employers provide a reasonable daily allowance that covers typical costs. Employees have flexibility in how they spend the allowance, creating a win-win situation where companies control costs while employees avoid administrative burden.

How Per Diem Works in Practice

Fixed Daily Rates

Per diem allowances are typically calculated as fixed daily amounts based on the location and nature of the work assignment. A company might provide $150 per day for employees attending a conference in Austin, covering meals and incidental expenses while the company separately covers hotel and transportation.

The rate usually varies by city or region, reflecting different cost levels. A per diem for New York City would be higher than one for Nashville, similar to how cost of living adjustments work for salaries.

Advance Payment vs Reimbursement

Most companies provide per diem allowances as advance payments, either through payroll or expense systems, before travel begins. This approach eliminates the need for employees to front-load expenses and wait for reimbursement.

Some organizations provide per diem as post-travel reimbursement, particularly for unexpected or last-minute business travel. However, advance payment is more common for planned events like company retreats.

What Per Diems Typically Cover

Meals and Beverages: The primary component of most per diems, covering breakfast, lunch, dinner, and reasonable beverages throughout the business day.

Incidental Expenses: Small miscellaneous costs like tips, local transportation between meetings, business center fees, or communication charges.

Local Transportation: Some per diems include taxi, rideshare, or public transit costs for business-related travel within the destination city.

What’s Usually Excluded: Lodging, major transportation (flights, long-distance trains), alcohol beyond reasonable amounts with meals, personal entertainment unrelated to business, and major equipment or supplies.

Remote Work Per Diem Scenarios

Company Retreats and Team Gatherings

The most common per diem scenario for remote workers involves periodic company gatherings. When a distributed team meets in person for strategic planning, team building, or social connection, companies typically provide per diem allowances to cover meals and incidentals.

A typical company retreat per diem might be $100-$200 per day, covering all meals, local transportation between activities, and miscellaneous expenses like coffee meetings or team dinners. The company usually covers accommodation separately.

Conference Attendance

When remote employees attend industry conferences, companies often provide per diem allowances that account for the higher costs associated with conference cities and networking events.

Conference per diems may be higher than standard business travel allowances, recognizing that networking dinners, conference center food, and industry social events often cost more than regular business meals.

Temporary Work Assignments

Some remote workers occasionally need to work from client sites, partner offices, or specific geographic locations for extended periods. Per diem allowances for these assignments might apply for durations ranging from a few days to several weeks.

Extended assignment per diems sometimes include partial lodging assistance or higher daily rates to account for the disruption to normal living patterns.

Coworking and Office Space Usage

A growing trend involves companies providing monthly or weekly per diem allowances for employees to use coworking spaces, recognizing that working from home isn’t always practical or productive.

Coworking per diems typically range from $30-$75 per day, covering day passes at quality coworking facilities. Some companies provide monthly allowances of $200-$500 for employees to use flexibly across different coworking options.

Per Diem Calculation and Standards

Government Rate Benchmarks

Many companies base their per diem rates on federal government standards, which provide defensible benchmarks and ensure compliance with tax regulations. In the United States, the General Services Administration (GSA) publishes annual per diem rates for every city and county.

GSA rates are broken into two components: lodging and meals & incidental expenses (M&IE). The M&IE portion, typically $59-$79 for standard locations and up to $79+ for high-cost areas, provides a baseline for business meal allowances.

Companies often use GSA rates as starting points, then adjust based on their specific needs, employee seniority, or business context. A company might pay 120% of GSA rates for senior executives or 150% for international travel.

International Considerations

International per diem calculations are more complex, accounting for currency fluctuations, cultural dining norms, and significantly varying cost levels between countries.

US State Department rates provide benchmarks for international travel, ranging from $100-$400+ per day depending on the country and city. However, these rates are designed for diplomats and may not reflect typical business travel needs.

Companies with global remote teams often develop their own international per diem schedules, sometimes using major consulting firm data or specialized travel cost services to establish fair rates.

Industry and Role Variations

Per diem rates often vary based on employee seniority, role requirements, or industry norms. Sales professionals who frequently entertain clients might receive higher allowances than engineers attending technical conferences.

Some companies use tiered systems where executives receive higher per diem rates, recognizing that senior-level business entertainment and networking may involve higher-cost venues.

Tax Implications of Per Diem

Accountable vs Non-Accountable Plans

Under US tax law, per diem payments can be structured as “accountable” or “non-accountable” plans, with significantly different tax implications.

Accountable plans require that per diem allowances meet specific IRS requirements: they must have a business purpose, employees must provide some documentation of business activity (though not detailed receipts), and excess amounts must be returned to the employer. Properly structured accountable plan per diems are not taxable income to employees.

Non-accountable plans treat per diem payments as regular income subject to payroll taxes and income tax withholding. While simpler to administer, non-accountable plans are less tax-efficient for both employers and employees.

IRS Per Diem Rate Compliance

To qualify for favorable tax treatment, per diem allowances generally cannot exceed federal per diem rates for the specific location and time period. Companies can pay less than federal rates but paying more may trigger taxable income treatment for the excess amount.

The IRS provides two methods for per diem compliance: the federal per diem rate method (using exact GSA rates) and the high-low substantiation method (simplified two-tier system). Most companies use federal rates for precision and defensibility.

Record Keeping Requirements

Even with per diem allowances, employers and employees must maintain records proving the business purpose and legitimacy of travel or work assignments. This includes trip itineraries, business justification, and proof of time and place of business activity.

Employees typically don’t need to provide meal receipts under per diem systems, but they should document the business purpose and duration of their travel or assignment.

Negotiating Per Diem Benefits

During Job Interviews

Per diem policies are often overlooked during salary negotiations but can represent significant value for remote workers who travel frequently for business or appreciate the flexibility of company-sponsored coworking.

When evaluating offers, ask specifically about per diem policies for team gatherings, conference attendance, client meetings, and any coworking or temporary office allowances. A generous per diem policy can be worth thousands of dollars annually for employees who travel regularly.

Specific Questions to Ask

What is the company’s standard per diem rate for domestic and international business travel? Understanding base rates helps you evaluate the benefit’s value.

How often does the company organize team retreats or gatherings? More frequent gatherings increase the practical value of per diem benefits.

Does the company provide coworking allowances or temporary office space per diems? This benefit supports flexibility in where you work.

What is the approval process for business travel that would qualify for per diem? Understanding approval requirements helps you plan and utilize the benefit effectively.

Are per diem rates tiered by seniority or role? This affects potential future value as your career progresses.

Negotiation Strategies

If a company’s per diem rates seem low relative to typical business travel costs in your region or industry, you can negotiate improvements. Frame requests around business efficiency—adequate per diems enable more effective networking, client relationship building, or team collaboration.

For senior positions, consider requesting enhanced per diem rates for client entertainment or industry event attendance, recognizing that senior-level networking may involve higher costs.

Some companies will negotiate annual travel and per diem budgets rather than per-day rates, providing a pool of money you can use flexibly throughout the year for business travel and related expenses.

Best Practices for Using Per Diems

Maximize Business Value

While per diem allowances provide flexibility, focus on activities that genuinely advance your professional objectives. Use meal allowances for client lunches, team dinners, or industry networking rather than just personal convenience.

Take advantage of the administrative simplicity—per diems eliminate the need to save receipts and file expense reports, allowing you to focus on business objectives rather than expense tracking.

Budget and Plan Strategically

Even though per diems provide daily spending flexibility, planning helps you maximize value. Research typical costs in your destination city, identify key networking opportunities, and allocate your allowance strategically across different types of activities.

Consider that you keep unspent per diem amounts—if you’re cost-conscious, per diem allowances can provide additional income while still meeting all business objectives.

Compliance and Professionalism

Maintain professionalism in how you utilize per diem allowances. While you’re not required to provide detailed receipts, your spending should align with business purposes and company culture.

Keep records of business activities even without detailed expense receipts—this protects you in case of audits and demonstrates that per diem usage supported legitimate business objectives.

Trends in Remote Work Per Diems

Coworking and Flexible Space Allowances

A growing number of remote companies provide monthly or weekly per diem allowances specifically for coworking space usage, recognizing that working from home isn’t always optimal for productivity or collaboration.

These allowances typically range from $200-$500 monthly and can be used flexibly across different coworking providers, coffee shops with good wifi, or temporary office spaces.

Digital Nomad Support

Companies hiring digital nomads or location-independent workers sometimes provide per diem allowances to support lifestyle flexibility. These might cover coworking costs in different cities or countries, temporary accommodation during transitions, or networking events in nomad communities.

Enhanced Team Gathering Benefits

As remote work has matured, companies increasingly view in-person team gatherings as crucial for culture and collaboration. Per diem allowances for these events have grown more generous, sometimes including spousal or family participation allowances.

Integration with Broader Stipend Programs

Per diem allowances are increasingly integrated into broader employee stipend programs that might include monthly allowances for professional development, wellness activities, or home office improvements, providing employees with flexible benefit dollars they can allocate based on their needs.