If you run a construction company, you already know the pain:🚧 Crews on the road🏨 Hotels, meals, incidentals🧾 Lost receipts and messy expense reports

There’s an IRS-approved shortcut that simplifies all of this: per diem.

What per diem does:Instead of tracking every meal and hotel receipt, the IRS allows employers to reimburse traveling employees using fixed daily rates.

When done right:• Tax-free to employees• Deductible to the business• Way less paperwork

FY 2026 Per Diem Rates (unchanged from FY 2025):• High-cost areas: $319/day• Low-cost areas: $225/day(lodging + meals & incidentals combined)

Confirm the location → apply the correct rate → reimburse.Clean. Simple. Defensible.

Important warning 🚨Per diem is an employer tool.Self-employed contractors (sole props, single-member LLCs, partners) generally cannot use the combined per diem rates for themselves.

Common mistakes I see:• Paying per diem without overnight travel• Using the wrong city’s rate• Mixing per diem and receipts incorrectly• No written accountable plan

TLDR:

Per diem is legal, IRS-approved, and massively underused in construction, but only if it’s set up correctly.

Disclaimer: This content is provided for educational purposes only and is not legal, tax, accounting, or financial advice. Every situation is unique, so consult your own attorney, CPA, or financial advisor before making decisions based on this information.