How to price per diem for a traveling crew with the FY 2027 GSA rates, $181 a day in most of the US

Per diem is a fixed daily allowance an employer pays a worker for lodging, meals and incidental expenses while the worker is away from home on a job. An estimator pricing work three states away needs that cost as its own line, and payroll needs to know how much of the allowance it can pay without treating it as wages. Both figures start from the federal per diem rates.

The General Services Administration (GSA) sets those rates for federal employees, and the IRS uses them as the ceiling for tax-free allowances. GSA’s new rates for fiscal year 2027 took effect on October 1, 2026. This post prices a crew’s travel from them.

What the federal rates are

GSA publishes a lodging rate and a meals and incidental expenses rate, called M&IE, for each location in the continental United States. A standard rate covers most of the country. GSA’s per diem page says about 300 non-standard areas have their own rates, and most of those are a key city plus its surrounding county.

For FY 2027, the standard rate is $113 a night for lodging and $68 a day for M&IE, according to GSA’s per diem data. Lodging rose $3 from $110 in FY 2026, and M&IE stayed at $68.

Some areas change rates by season. Denver/Aurora lodging is $227 a night from April through October and $170 from November through March in FY 2027. A job that runs through the spring crosses from one rate to the other, so the estimate should split the nights by month.

GSA’s M&IE table also lists a first and last day amount for each tier, which works out to 75% of the full-day rate. For the $68 tier that is $51.

What the IRS rules decide

IRS Publication 463 covers how an employer treats these allowances. Under an accountable plan, reimbursements aren’t reported as pay. An accountable plan is a reimbursement arrangement that meets the IRS rules, and for a per diem that means the allowance is no more than the federal rate and each worker documents the dates, place and business purpose of the travel.

Publication 463 sets out the points that matter for a traveling crew:

1. The federal rate can be the regular GSA rate, the standard meal allowance, or the high-low rate. The high-low method uses two flat rates, one for designated high-cost locations and one for everywhere else, and the IRS updates it in a notice each year.
2. The rate comes from the place where the worker stops for sleep or rest. A crew that works in one county and sleeps in a cheaper one uses the rate where they sleep.
3. Travel days are partial days. One method gives three-fourths of the M&IE rate for the day of departure and the day of return. The other allows any proration method the employer applies consistently and that follows reasonable business practice.
4. When the employer pays the hotel directly or furnishes lodging, the worker’s allowance covers M&IE only.
5. An allowance above the federal rate splits in two. The amount up to the federal rate goes under code L in box 12 of the W-2 and isn’t taxable, and the excess goes in box 1 as wages.

Publication 463 also ties the tax treatment to how long the assignment is expected to last. It calls an assignment in a single location temporary when it is realistically expected to last, and does in fact last, one year or less. An assignment expected to last more than a year is indefinite from the start, the job site becomes the worker’s tax home, and the living allowances become income. A series of short assignments to the same location can add up to an indefinite one. On a long project, set the travel policy with your tax adviser before the first crew mobilizes.

Allowances under an accountable plan aren’t reported as pay, so the items in the labor burden post that are calculated on wages may not apply to them. Confirm each burden line with your payroll provider before pricing.

A worked example

The figures below are an example. A four-person crew travels out on a Sunday, works three 50-hour weeks, and returns home on the Sunday three weeks later. That is 21 nights of lodging and 22 days of M&IE, with full M&IE on 20 days and the three-fourths rate on the two travel days. Each worker logs 150 hours.

In a standard-rate area, each worker’s per diem comes to $3,835. Lodging is 21 nights at $113, or $2,373. M&IE is 20 days at $68 plus 2 days at $51, or $1,462. The crew of four costs $15,340, which spread over 150 hours per worker adds $25.57 to every hour worked.

The same job in Denver in May costs $26,980 for the crew, or $44.97 per hour worked. Moved to January, the lower lodging rate brings it to $22,192, with the same hours and the same M&IE.

A crew that stays on site through Saturday and Sunday draws lodging and M&IE on days with no hours to charge. Shorter workweeks spread the same per diem over fewer hours, which raises the cost per hour worked. The 50-hour weeks in this example tie to the overtime premium post, which prices the extra hours themselves.

How to start on your jobs

Pull the travel costs from your last out-of-town job and split them into lodging, meals and incidentals by worker and by night. Look up the GSA rate for the ZIP code where the crew slept, for the months they were there, and compare what you paid against the federal rate line by line. Under Publication 463, the amount paid above the rate is wages, so check how payroll reported it.

On the next bid outside your home market, price per diem from the GSA rate for the job’s location and season, then divide it by the crew hours in your schedule. Carry that per-hour figure next to the labor rate in the estimate, so a schedule change that adds weekends or shortens weeks shows up in the travel line as well.