What is per diem?

Per diem is a daily allowance paid to cover business travel costs (lodging, meals, incidentals). It replaces the need to save every receipt.

Do I need receipts?

For meals and incidentals: No, if you use the federal per diem rates.

For lodging: Yes, unless lodging is part of the per diem allowance.

Always: Document the dates, location, and purpose of the trip.

Is per diem taxable?

Not taxable if paid under an IRS “accountable plan”: business purpose, substantiation, and no excess.

Taxable if the allowance is higher than federal rates or if no expense report is provided.

Can I pay per diem for day trips?

No. The IRS and Arizona require overnight travel for per diem to be tax-free. Meal allowances for same-day trips are taxable wages.

What about long assignments?

Per diem is only tax-free for temporary assignments lasting one year or less in a single location. Beyond one year, payments must be treated as taxable wages.