What’s M&IE? A simple guide to per diem expenses

When employees travel for work, costs tend to add up fast. Most companies already set limits for big-ticket items like flights, hotels, and rental cars. But another category can quietly drive up your travel budget: meals and incidental expenses (M&IE). 

These smaller costs—things like breakfasts, coffee runs, and tips for bellhops—can slip under the radar, seriously impacting your bottom line if the company doesn’t have a system in place.

This clear, practical guide will walk you through what M&IE is and how to set smart spending limits for your team—without nickel-and-diming them or overcomplicating the process.

What’s M&IE?

M&IE stands for Meals and Incidental Expenses. It’s a daily allowance covering food costs and minor travel-related expenses for employees traveling for work.

Instead of asking employees to itemize every cup of coffee or cash tip, many organizations give a daily flat rate, often called a per diem, to cover these costs. To simplify things, it’s common for companies to use the M&IE per diem daily rate set by the U.S. General Services Administration (GSA). This per diem approach helps employers stay consistent and ensures employees don’t have to make out-of-pocket payments while on the road.

What are M&IE per diem rates?

The GSA sets M&IE rates for different locations in the U.S. based on the cost of living in each area. That means a high-cost city like New York or San Francisco will have a higher daily M&IE rate than a smaller city or rural area.

M&IE rates typically include: 

• Meals: Breakfast, lunch, and dinner during business travel.
• Incidentals: Small, non-meal costs like tips for hotel staff, valet parking, or rides between meetings.

GSA rates are updated each fiscal year and are often divided into tiers depending on the travel destination. The Departments of State and Defense issue separate per diem guidelines for international travel. 

An easier way to cover incidentals 

Some companies ask employees to pay incidental costs upfront and submit receipts later, which isn’t just a hassle—it may also create financial strain for employees. Engine’s Incidentals Program removes that burden by covering these smaller business expenses in advance. With a travel management program that includes M&IE coverage, employees can arrive at their hotel knowing their stay—and any necessary extras—are already taken care of. It’s a win-win: The business gets a consolidated bill, and the team avoids the stress of last-minute reimbursements.

How to plan M&IE for your business

Planning M&IE for your team starts with understanding when and how to apply per diem rates. Here are some tips.

Use the GSA Per Diem Lookup Tool

Check standard rates for each travel destination, especially if employees frequently visit different locations. Some companies match GSA rates exactly, while others adjust based on region or role. 

Note: The IRS may consider any business expense above the per diem as taxable income.

Set clear policies

Define when M&IE is allowed, how it’s calculated, and whether employees need to submit documentation or follow specific timeframes (like half-day allowances). Leave room for reasonable judgment, and aim to reimburse employees promptly.

Consider partial days

Many companies choose to prorate the per diem on travel days—especially for shorter trips—or offer a percentage of the full rate on the first and last day. This approach helps control costs while still supporting employees fairly.

Document everything

Even if your policy doesn’t require meal receipts for M&IE reimbursement, it’s still important to track travel dates, destinations, and allowances. Good documentation supports IRS compliance, simplifies audits, and keeps internal records clean.

Define what’s reasonable for your organization

Before approving travel expenses, ask yourself:

• How long is the trip?
• Is the destination high-cost or budget-friendly?
• What expenses are standard for that location?
• What type of work is required?

For example, an employee travelling to a small town for a client meeting might grab a $12 sandwich from a local cafe, while another bills for a $95 steak dinner with a client, complete with wine and dessert. Depending on the company culture, the type of meeting or event, and the location, both might be considered “reasonable” M&IE business expenses—that’s something that only your organization can decide.

The benefits of establishing per diem M&IE for your employees

Using per diem rates for M&IE has advantages for both the employer and the employee: 

• Saves time: There’s no need for employees to keep meal receipts or fill out detailed expense reports for every coffee or snack.
• Predictable budgeting: You’ll know in advance what each trip will cost in terms of food and incidentals.
• Compliance-friendly: Government-approved rates maintain alignment with IRS guidelines and simplify tax reporting.
• Fairness: Everyone knows what’s covered—there’s no room for confusion or favoritism.
• Boosts morale: Employees appreciate the fairness and simplicity of a set daily allowance, especially if they’re frequently on the road. Clear guidelines reduce awkward conversations or disagreements about what's “reasonable” when submitting their expense report for reimbursement.

What to watch for

While per diem policies can help manage costs, they may feel restrictive if not handled with care. Some employees might feel limited in their food choices, skip eating to pocket the extra money, or pay out of pocket to upgrade their meals or lodging. 

To keep things fair and flexible, consider allowing employees to spend more than the daily per diem if they choose—but be clear that you’ll only reimburse them up to your set limit.

Optimize your business travel operations with Engine

Engine simplifies travel planning and expense tracking for modern businesses. With built-in tools for managing per diem allowances like M&IE, we help companies like yours streamline approvals, enforce policy compliance, and reduce administrative overhead. With Engine on your team, employees will gain clarity, your finance team will gain control, and everyone will get where they need to go—without wasting time chasing receipts.

Ready to ditch the paperwork? Let Engine help you save time, stay compliant, and keep business travel running smoothly.

FAQs

How do M&IE rates work when traveling abroad?

For international business travel, per diem rates are issued by the U.S. Department of State or Department of Defense. These rates are location-specific and often higher than domestic rates due to currency differences and local costs.

Why do some employers pay more than the federal per diem rate?

Some companies choose to exceed the GSA rate to attract top talent or accommodate employees in high-cost destinations. But it’s worth noting that any amount over the federal GSA per diem rate may count as part of the employee’s taxable income.

How are per diem rates calculated?

Per diem rates are based on the cost of living in each area as determined by the GSA and usually include separate amounts for meals and incidentals. Employers can offer the full amount or adjust based on travel duration and policy.