Do you need receipts with per diem?

Not for the covered categories — meals and incidentals (and lodging under full per diem) need no receipts within federal rates. You still substantiate the trip itself: dates, locations and business purpose. Everything outside per diem stays on receipts.

Can self-employed people use per diem?

Only for meals and incidentals. Self-employed taxpayers must use actual expenses with receipts for lodging — the meals-only per diem is the common self-employment pattern.

Is per diem taxable income?

Not when paid under an accountable plan at or below federal rates with the trip substantiated. Amounts above federal rates, or allowances without substantiation, become taxable wages.

Where do per diem rates come from?

The GSA sets rates for the continental US (gsa.gov/perdiem), updated every October 1 with locality-specific amounts. The State Department and DoD publish foreign and non-CONUS rates.

Per Diem vs. Actual Expenses: Which Should You Use?

Per diem pays a flat daily allowance for travel costs at government-set rates and eliminates most receipt-keeping; the actual-expense method reimburses what you really spent and requires the receipts to prove it. Companies choose per diem for simplicity and cost predictability; travelers with expensive-city itineraries often do better on actuals. The right answer is mostly determined by who you are and where you go.

This is general information, not tax advice.

How per diem works

The GSA publishes daily rates for lodging and for meals & incidental expenses (M&IE) for every US locality, updated each October; high-cost cities carry higher rates. Under an employer's accountable plan, per diem reimbursements within federal rates are tax-free to the employee, and no meal receipts are required — substantiation reduces to time, place and business purpose of the trip. Partial travel days prorate (typically 75% of M&IE on departure and return days).

Two structures exist: full per diem (lodging + M&IE, no receipts) and the more common hybrid — actual lodging with receipts, per diem for meals only.

How actual expenses work

You keep every receipt and are reimbursed (or deduct) what you actually spent, subject to policy caps and the substantiation rules — itemized receipts, business purposes, the works, as detailed in what receipts you need for an expense report. More paperwork, exact economics.

Who is allowed to use which

Employees under an accountable plan: either, as the employer chooses.
Self-employed: may use per diem for meals only — lodging must be actual with receipts. This asymmetry surprises people annually.
Owners of more than 10% of a company (and relatives): restricted from lodging per diem; meals-only again.

The economics: when each wins

Per diem wins when you spend below the rate — modest eaters in high-rate cities effectively keep the difference (as tax-free reimbursement, not taxable income, when within federal rates). Actuals win when travel runs expensive: client dinners, conference-city hotels above the lodging cap, or when your company reimburses generously. The administrative math matters too: per diem removes the meal-receipt chase entirely — no lost receipts, no missing-receipt affidavits, no line-item disputes over minibar water.

What per diem does NOT cover

Airfare, rental cars, fuel, parking, tolls, client entertainment and business supplies stay on actuals with receipts under either method. Per diem compresses meals and incidentals (and sometimes lodging); it doesn't abolish the expense report.

The bottom line

If you control policy: meals per diem + actual lodging is the pragmatic middle — it kills the worst receipt problems while keeping lodging precise. If you're self-employed: meals per diem is available, lodging receipts are mandatory. Either way the trip log (dates, places, purpose) remains non-negotiable — the requirement that survives every method, as the IRS $75 rule shows in miniature.

Should You Use Per Diem or Actual Expenses?