What Is M&IE in Per Diem?
Most businesses set limitations on the amount employees can spend on lodging expenses, flights, and ground transportation for business travel.
These three elements of a business trip tend to be the most expensive, but they’re not the only costs involved.
Other expenses, such as meals and incidentals (M&IE), can add up quickly. If you don’t set limitations on employee spending, a pricey business trip could turn into an outrageously expensive one.
Not sure how to set M&IE limits for your employees?
If you manage business travel, here’s what you need to know about M&IE per diem rates and the best ways to establish them for your employees.
Table of Contents
1. What Is M&IE?
2. M&IE for Federal and Government Workers
3. M&IE for Businesses
4. How to Plan Your Meal Expenses
5. How to Plan Your Incidental Expenses
6. The Benefits of Establishing Per Diem M&IE for Your Employees
What Is M&IE?
The “M” in M&IE refers to meals. The “IE” refers to incidental expenses. Most businesses combine these into an M&IE per diem rate — a total rate designed to keep travel expenses low during business trips.
When we talk about meal per diem rates, we’re referring to any meal eaten during the course of a business trip. That includes all breakfasts, lunches, and dinners.
Incidental expenses refer to small fees and tips that aren’t part of meals, lodging, or flight expenses. Examples of incidental expenses include tips for hotel housekeepers, tips for bellhops at the hotel, and tips for baggage handlers at the airport.
Incidental expenses can also include tips and transportation costs for ground travel between hotels, airports, restaurants, and wherever employees are conducting business.
Looking to save money on business travel? Hotel Engine can get you access to corporate hotel discounts that will help you save big on lodging.
M&IE for Federal and Government Workers
The federal government has a strict travel policy for government workers that specifies how much they can spend on lodging, transportation, and M&IE. Individuals who work for the government must follow the M&IE rates established by the U.S. General Services Administration.
GSA per diem rates vary based on the travel destination. Regardless of the destination, there is a $5 per day allowance for incidental expenses. Meal expenses vary from region to region.
Most states have an M&IE per diem rate between $59.50 and $64.00. The Department of Defense sets additional federal travel regulations and per diem rates for U.S. territories outside the continental U.S., including Alaska, Hawaii, and all foreign travel destinations.
In 2022, here are the locations that allow for the highest M&IE per diem rates:
- District of Columbia: $79
- Massachusetts: $69.94
- California: $67.14
- New Jersey: $65.43
- Connecticut: $64.63
Here are the states with the lowest M&IE per diem rates:
- North Dakota: $59.00
- Nebraska: $59.05
- Oklahoma: $59.06
- Arkansas: $59.07
- West Virginia: $59.09
GSA lodging rates vary much more than M&IE rates. For example, the lodging rate for the District of Columbia is $220 per night, while the lodging rate in the state of North Dakota is just $96.00.
For a complete list of GSA per diem rates, visit GSA.gov.
M&IE for Businesses
As a public or privately owned business, how much you allow your employees to spend on M&IE is entirely up to you. There is no specific amount that works for every business, and every business should use their own discretion when setting M&IE per diem allowance rates.
Some private businesses use the GSA government rates. Others use them as a guideline for determining their own rates for meal reimbursements and M&IE allowances.
Some companies don’t set any per diem rate at all and leave expenses up to the discretion of their employees, as long as the expenses are reasonable.
For one business, $50 might be a “reasonable” amount to spend on dinner. Another business might find a $100 dinner bill within limits. Other businesses might deem a $350 price fixe chef’s tasting menu at a Michelin star restaurant to be a reasonable amount to spend.
It’s entirely up to the business and how much they’re willing to spend on employee business travel.
No matter what M&IE rates you set for employees, businesses should consider where their employees are traveling and the type of work they do.
Set Meal Allowances Based on Location
If you’re sending an employee to work in Mississippi, a $10 allowance for breakfast may be more than sufficient for a hearty first meal of the day. But in NYC, $10 is barely enough to buy a large Starbucks coffee and a scone.
Consider where your employees are working and establish flexible M&IE rates that correspond to the cost of living in each destination location.
Set Meal Allowances Based on the Work Scope
For example, if your employee is driving out of town in the morning for an afternoon business meeting and driving home a few hours later, a $20 lunch allowance may be more than sufficient. But if you’re sending a construction crew to a remote location to do intense physical labor, $20 a day likely won’t cut it.
When establishing your meal allowances for employees, it’s important to consider the number of hours they’re expected to work and the length of their trip.
How to Plan Your Meal Expenses
As a travel planner or business travel manager, it’s up to you and your team to plan for meal allowances.
When doing so, you’ll want to:
Build the Framework
Some businesses put strict per diem rates in place before employees travel. Some give cash or travel stipends to their employees in advance of their trip, while others have their employees pay for M&IE out of pocket and reimburse them for their expenses.
You can also choose not to set per diem rates and allow your employees to charge all M&IE expenses on a corporate credit card. In this scenario, it’s best to have employees provide receipts as proof of M&IE expenses and/or generate monthly expense reports for all expenses that occur during the course of business travel.
The amount you’re willing to spend on M&IE is entirely up to you and may fluctuate from trip to trip.
Here’s why:
Let’s say your employees are attending a leadership conference where an entry fee includes a meal, such as lunch. Since the cost of that lunch is already included in another expense, you may choose not to provide a lunch allowance for that particular day.
Some companies do not put such restrictions on their employees and prefer that they have the flexibility to either eat the provided meal or use their M&IE budget to purchase a meal elsewhere.
Consider the Type of Work Your Employees Perform
The type of work your employees do during business travel makes a big difference in how much of a meal allowance you should allot.
Are your employees entertaining clients?
If so, they’ll need a bigger expense allowance. When client meals are part of the equation, meal allowances often increase significantly.
Are your employees traveling as part of a labor crew to do difficult, physical work?
In this case, it can be beneficial to both the company and the employee to up their per diem meal allowance. The more physical the job, the more your employees may need to eat during the course of a day.
Be Mindful of Dietary Restrictions
Keep dietary restrictions in mind, as well. Some employees may be perfectly content eating inexpensive fast-food meals on the go. Others may have nutritional or dietary concerns and require a more expensive vegan, vegetarian, organic, gluten-free, or kosher food.
Want to learn more about how to structure and plan for meal allowances? Read this in-depth guide: How to Plan Meal Allowances.
How to Plan Your Incidental Expenses
GSA rates allow for $5 per diem reimbursement for incidentals. But depending on where your employees are traveling and how long they plan to stay, $5 per day often isn’t enough.
Here are some questions to ask when determining how much your business is willing to pay for incidental expenses:
What Is the Length of the Trip?
How long your employees will be out of town is a major factor in how much they should be allowed in incidentals.
On a one-day trip where your employee won’t have to check baggage or check into a hotel and will only have one meal during the course of business, $5 for taxi tips may be sufficient.
But on a ten-day trip, your employee may have to tip all kinds of people:
- Porters at the airport
- Bellhops upon check-in
- Housekeeping staff upon checkout
- Taxi/rideshare drivers
And $5 per day may not cut it.
What Is the Destination Location?
The GSA establishes M&IE rates based on the destination, and you should too.
No matter how little or how much you’re willing to spend on employee M&IE, consider what incidentals cost in that location, and make sure that the actual expenses your employees ask to be reimbursed for are in line with those costs.
Set Your Employees Up With IE Coverage For Lodging Through Hotel Engine
Some businesses have their employees cover incidental costs and reimburse them later. This works well for businesses but can be problematic for employees that are low on cash or credit.
With Hotel Engine, incidental expenses are covered up front and billed directly to the company at the end of each month. That way, you can relieve your employees of this burden when it comes to checking-in at their hotel.
So what’s the final advice here? Just be reasonable in the M&IE rates you set so your employees can continue to be excited about taking business trips on your behalf.
Learn more about Hotel Engine’s Incidentals Program and our corporate hotel booking software!
The Benefits of Establishing Per Diem M&IE for Your Employees
Whether you choose to set reimbursement rates or provide employees with an M&IE travel stipend up front, there are many benefits to establishing per diem travel rates for your employees.
For one, it can save you tons of money. Without established limits, you give your employees carte blanche to spend whatever they want on food, travel, and other expenses incurred during a trip. Setting limitations encourages employees to be more cautious about their spending while traveling for business.
Having an M&IE per diem rate in place also helps to establish a system of fairness amongst employees. That way, every traveling employee knows which expenses are eligible for reimbursement and which ones are not.
The more frequently your employees travel, the more beneficial having an established per diem rate will be to your bottom line.
The Cons of Setting M&IE Per Diem Expenses
Setting per diem rates does have one drawback:
Your employees may feel restricted as to where they can go, where they can stay, what they can eat, and what they can do.
Let them know that they always have the option to spend above and beyond the per diem rates to meet their own needs but that the business will only cover X amount per day.
If you choose to provide your employees with a cash per diem prior to travel, always ask them to provide receipts to prove that the money was spent in the appropriate way.
If not, your employees may choose to spend less than the M&IE per diem rate and pocket the extra cash. This can be a huge benefit to the employee but a loss for the business.
As in all things, the key is finding that happy medium to ensure every trip feels like a win-win.
Here are some other per-diem related guides you might find helpful:
How to Create an Employee Travel Budget | Per Diem and Employee Rights | Per Diem and Taxes
Government workers have to abide by strict GSA M&IE rates when they travel. But businesses that aren’t government entities have total control over how much their employees are allowed to spend for meals and incidental travel expenses.
Saving money is key to every business, so be mindful of where your employees travel and the type of work they do before establishing M&IE allowances. You need your employees to perform their best at all times, so try to find a happy medium that makes sense for both your employees and your bottom line.
For more information on how you can save money on business travel and corporate lodging, join Hotel Engine for free today.
