For federal employees traveling within the United States, the lodging per diem does not include taxes. State and local hotel taxes, occupancy taxes, and sales taxes on your room are reimbursed as a separate miscellaneous travel expense on top of the per diem cap, under the Federal Travel Regulation.1eCFR. 41 CFR 301-11.27 – Are Taxes Included in the Lodging Portion of the Per Diem Rate The picture changes for foreign travel and for private-sector employees paid a flat daily amount, where taxes generally have to fit inside the per diem.
How Federal Lodging Per Diem Handles Taxes
The General Services Administration sets a maximum nightly lodging rate for each domestic location.2U.S. General Services Administration. Per Diem Rates For fiscal year 2026, the standard CONUS rate is $110 per night, with higher-cost cities carrying higher amounts. That cap governs the room charge only. The 12 or 15 percent your hotel adds in local taxes goes on your travel voucher as a separate line item, so a $110 per diem really does cover $110 worth of room.3General Services Administration (GSA). Per Diem FAQs
There is a catch when you book above the cap. If your authorized rate is $50 per night and you stay somewhere charging $100, tax reimbursement is limited to the taxes calculated on the $50, not the taxes you actually paid.1eCFR. 41 CFR 301-11.27 – Are Taxes Included in the Lodging Portion of the Per Diem Rate You also need a receipt showing tax was paid, and you can only be reimbursed for taxes that your state or local government actually charges the federal government in the first place.
State Exemptions That Zero the Tax Out
Some states and U.S. territories exempt federal employees on official business from paying state lodging taxes when the traveler pays with a GSA SmartPay government travel card. Rules vary. Some exempt state tax only while local tax still applies, and some require a completed tax-exemption form at check-in.4Defense Travel Management Office. Save on Lodging Taxes in Exempt Locations
Before you leave, check smartpay.gsa.gov to see whether your destination offers an exemption for individually billed accounts, and download the required form if there is one. Hotels don’t always know their own state’s rules, so arriving with the form and a printout of the exemption language saves time at the desk. If the hotel refuses the exemption despite valid documentation, pay the taxes and reclaim them after the trip.5U.S. General Services Administration. SmartTax Customer Guide Group bookings paid through a centrally billed account are tax-exempt in every state and territory regardless of the individual-traveler rules.
Resort Fees and Other Mandatory Charges
Readers often lump resort fees with taxes, and the treatment turns out to be similar. In 2002, GSA amended the Federal Travel Regulation to classify non-optional resort fees and energy surcharges as reimbursable miscellaneous travel expenses, meaning they can be reimbursed outside the per diem cap.6Federal Register. Federal Travel Regulation (FTR) Corrections and Additions
The operative word is “non-optional.” A $35 daily facility fee that every guest pays regardless of use can qualify. But agencies must review what the fee actually covers before authorizing reimbursement, because some resort fees bundle tour tickets or gift credits that aren’t appropriate for federal reimbursement.7GENERAL SERVICES ADMINISTRATION. FTR 19-04 Reimbursement of Fees for Conventional and Nonconventional Lodging Confirm with your travel office before booking a property that charges one.
Foreign Travel Works the Opposite Way
Outside the United States, the rule flips. The Department of State sets foreign per diem rates, and those rates have not had lodging taxes removed. Taxes are built into the foreign per diem, so you cannot file a separate claim for lodging taxes incurred abroad.3General Services Administration (GSA). Per Diem FAQs Your room rate plus every tax on it has to fit inside the State Department’s published rate for that location. Budgeting a foreign trip with the same assumptions you’d use domestically will leave you short.
Private-Sector Per Diem Usually Includes Taxes
Everything above applies to federal government travel. If you work for a private employer that pays per diem, the mechanics are different.
The IRS publishes rates that private employers can adopt through the high-low substantiation method. For travel on or after October 1, 2025, the totals are $319 per day for high-cost cities and $225 per day for other CONUS locations, with $86 and $74 of those amounts respectively treated as the meals portion.8Internal Revenue Service. Notice 2025-54, 2025-2026 Special Per Diem Rates That leaves $233 for lodging in high-cost areas and $151 elsewhere.
Private-sector per diem is typically a flat daily payment with no separate tax line. If your employer pays you $151 per day for lodging, that number has to cover the room rate and the taxes on it. You won’t file a separate claim for the $18 in hotel tax the way a federal traveler would.
Whether that payment is taxable to you depends on the plan. Under an accountable plan, where you report the time, place, and business purpose of the trip and return any excess, per diem at or below the federal rate is not included in your wages. Any amount above the federal rate shows up in Box 1 of your W-2 as taxable income.9Internal Revenue Service. Publication 463 (2025), Travel, Gift, and Car Expenses Under a nonaccountable plan, the whole per diem is treated as wages.
Some private employers reimburse actual lodging costs instead, paired with a meals-only per diem. In that structure, lodging taxes come back to you as part of the actual room cost the employer is paying. If you don’t know which method your company uses, check the travel policy or ask finance before you book. In a high-tax city, the difference runs into hundreds of dollars per trip.