U.S. employers reimbursing business travel have two federal frameworks to choose from: the GSA per-locality method (298 city rates plus a standard rate) or the IRS high-low substantiation method (two flat rates). For FY2026 both are unchanged from the prior year. This guide compares them and helps you pick the one that fits your payroll.
The Two Methods at a Glance
| Feature | GSA per-locality | IRS high-low (FY2026) |
|---|---|---|
| Number of rates | 298 cities + standard | 2 (high / low) |
| High rate | up to $471 (Nantucket) | $319/day |
| Low / standard rate | $178/day | $225/day |
| Meals portion | $68–$92 by city | $86 high / $74 low |
| Seasonal lodging | Monthly caps | Fixed all year |
GSA Per-Locality Method
The GSA method pays the destination-specific rate: the standard CONUS rate of $178/day ($110 lodging + $68 M&IE) in most locations, with higher caps in roughly 298 non-standard areas. It is the default for federal travel and the benchmark most private employers use.
Pros: matches real hotel costs; fair to travelers; exact for one-off destinations. Cons: requires looking up each city and tracking monthly lodging changes — e.g., Monterey, CA swings from $191 to $279 by season.
IRS High-Low Method
Under IRS Notice 2025-54, an employer pays $319/day to high-cost localities and $225/day everywhere else in CONUS. The high-cost list (~90 localities) is defined by a federal rate of $272 or more for the covered months. Consistency is required: once a taxpayer elects high-low, the same method applies for the entire annual period (Rev. Proc. 2019-48).
Pros: dead simple payroll; no per-city lookups; predictable. Cons: overpays low-cost destinations ($225 vs $178 standard) and can underpay peak-season hotels in top cities.
Which Should Your Company Use?
- Small teams, few destinations → GSA per-locality. The DayFig rate tables make lookups fast.
- Large sales or consulting teams → high-low. One rate for "big city" and one for everywhere else keeps payroll simple.
- Contractors and 1099 workers → your contract decides. High-low is popular because it needs no itemized receipts beyond the accountable plan basics.
Hybrid Is Fine
The methods are not exclusive: many employers pay actual lodging up to the GSA cap plus a per diem M&IE — or use per-locality for planning and high-low for payroll. What you cannot do is switch between methods mid-year for the same employees. (Rev. Proc. 2019-48, §5.04.)
Next Step
Use the per diem trip calculator for per-locality totals, and the high-low guide for the two-rate shortcut. Then confirm your chosen method is applied consistently for all of FY2026.
Sources: GSA FTR 26-01 and GSA per diem API (retrieved 2026-08-19); IRS Notice 2025-54; Rev. Proc. 2019-48. Not tax advice.