2025 Denver Per Diem Rates for Small Business Owners

As a small business owner or employee for one that requires work-related travel in Colorado, you’ll want to know Denver per diem rates to manage your travel finances efficiently. But what does per diem cover? 

Let’s break it down so you can make the most of your travel budget.

What is Denver per diem?

Per diem is a daily allowance that covers meals, lodging, and incidental expenses. Employers provide this allowance to employees traveling for work. This system simplifies expense management and ensures fair compensation for out-of-pocket costs. 

The U.S. General Services Administration (GSA) sets these rates annually to standardize reimbursements for federal employees and contractors. Rates for per diem vary by location. For example, per diem Denver rates might differ compared to smaller cities to account for higher cost of living. This discrepancy is visible across all states, as for example, per diem rates in San Diego are higher than the base rate in the state of California. 

While there are no per diem law requirements for small businesses, per diem can be a helpful guideline to follow when considering employee compensation. 

Types of per diem rates in Denver.

Managing your work travel budget can be stressful, especially when every city has different costs. Understanding the types of per diem rates can help ease this burden.

Lodging per diem rate.

The lodging per diem rate covers your hotel or other accommodation costs while traveling for work. This rate varies based on the location and the time of year. For instance, staying in Denver during peak tourist season might have a higher rate compared to off-peak times. 

Meals & incidental expenses (M&IE) per diem rate.

The Meals & Incidental Expenses (M&IE) per diem rate covers your daily food, tips, and other small fees. This rate also varies by location. In Denver, you might find that the M&IE rate is higher than in smaller towns due to the cost of living. 

Combined per diem rate.

The combined per diem rate includes both lodging and M&IE. This rate provides a single daily allowance that covers all your travel-related expenses. Using the combined rate simplifies your budgeting, as you don't need to separate your lodging and meal expenses. This rate is particularly useful if you prefer a straightforward approach to managing your travel costs. 

How does per diem work in Denver? 

Rather than providing itemized receipts for each expense, your employees on a work trip receive a daily allowance for lodging and meals. However, a small business should still require employees to track expenses and provide an expense report at the end of the trip. This ensures proper record-keeping and keeps your business compliant when reimbursing employees. 

Regardless of which state your employee is traveling to, per diem functions similarly—the rates simply differ based on location.

What is the per diem in Denver, Colorado?

Like with other non-standard areas, the per diem rate in Denver, Colorado changes with each fiscal year and month to month. For the 2025 fiscal year which began in October 2024, here are the lodging and M&IE rates. 

Lodging per diem rate for Denver Colorado in 2024-25.

• ‍October 2024: $215‍
• November 2024 - March 2025: $165‍
• April 2025 - September 2025: $215

Meals & incidental expenses (M&IE) per diem rate for Denver Colorado in 2024-25.

• ‍M&IE total: $92‍
• Breakfast: $23‍
• Lunch: $26‍
• Dinner: $38‍
• Incidental expenses: $5‍
• First and last day of travel: $69.00

How to calculate per diem payments in Denver.

Calculating per diem payments can seem tricky, but with a few steps, you can get it right and ensure employee reimbursements are accurate.‍

1. Determine applicable dates.

Start by identifying the rates for per diem in Denver on the dates that your employee is travelling. Knowing your travel dates helps you calculate the total number of days you will need per diem payments and determine which rate applies. ‍

2. Calculate total per diem. 

Based on the per diem rates, multiply the correct number of days for M&IE and nights for lodging coverage until you have a total per diem. Using the example of a 5 day business trip, total per diem would be calculated like this:

• Lodging: $215 x 4 nights = $860
• M&IE: $92 x 5 days = $460
• Total Per Diem: $860 + $460 = $1,320

‍3. Adjust for first and last days of travel. 

The first and last days of travel have different rules for per diem compensation. Typically, employees receive 75% of the M&IE rate on these days. For instance, if the first and last days in Denver are travel days, then the M&IE calculation would be:

• First Day: $69.00
• Last Day: $69.00
• Full Days: $92 x 3 days = $276
• Total M&IE: $69.00 + $69.00 + $276 = $414

The total lodging would remain the same for 4 nights. Add the lodging amount to this adjusted M&IE cost to get the final per diem amount. 

• Lodging: $860
• M&IE: $414
• Total per diem: $860 + $ 414 = $1,274

‍4. Submit expense report

To support per diem reimbursement, your employee should be prepared to submit an expense report. They should include all necessary details, such as travel dates, the per diem rates applied, and the total amount for each day. 

Your employees might ask questions like, “do you need receipts for per diem?” To address these concerns, make sure you use team communication tools to provide clear guidance on submitting expense reports to your team.

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What are the benefits of using per diem rates?

Traveling for work can be overwhelming, especially when juggling receipts and expense reports. Using per diem rates can alleviate some of that stress.

Simplify expense reporting.

Using per diem rates simplifies expense reporting for employees. Instead of collecting and submitting numerous receipts, employees just need to track travel days. This streamlined process reduces paperwork and administrative tasks, making it easier to focus on work. 

Provides tax advantages.

Many business owners wonder: is per diem taxable income? Per diem payments offer tax advantages. Some per diem payments are tax-free, which means you won't have to report them as taxable income. This can result in significant savings, especially if your or your employees travel frequently for work. Understanding which per diem payments qualify as tax-free can help you maximize these benefits. 

Ensure fair compensation.

Per diem rates ensure fair compensation for travel expenses. They standardize travel reimbursements, so employees receive a consistent daily allowance regardless of where they travel, while also scaling appropriately to the destination. This consistency helps you budget for your business more effectively and ensures your team feels fairly compensated for travel expenses. 

Are per diem payments taxable?

Understanding the tax implications of per diem payments can save you from unexpected tax bills. Here’s what you need to know. Per diem payments can be tax-free or taxable, depending on specific conditions. 

Generally, per diem payments are not taxable if they follow the IRS guidelines. These guidelines require that the per diem rates do not exceed the federal per diem rates and that the employee provides a detailed expense report.

Substantiated vs. Unsubstantiated Expenses.

Substantiated expenses are those for which employees provide adequate documentation. This includes details such as dates, locations, and the business purpose of the trip. When employees submit an expense report with this information, their per diem payments remain tax-free. 

Unsubstantiated expenses, on the other hand, lack proper documentation. If the necessary details are not provided, the IRS may consider these payments as taxable income.

Handling excess reimbursements.

So when does per diem become taxable? Excess reimbursements occur when the per diem payments exceed the federal rates or when proper documentation is not provided. In such cases, the excess amount becomes taxable, which must be reported as income on tax returns. To avoid this, ensure that your per diem payments align with the federal rates and that employees submit a detailed expense report.

Polish up your per diem payments. 

Manual calculation of travel reimbursements is a costly use of time. But if you’re a small business owner with an hourly team, you know it’s important to compensate your employees fairly and promptly. 

That’s why Homebase payroll exists to make the life of small business owners like you easier. By using our payroll tools, you can automate processing payments for your employees while staying compliant with local laws. That way, you can take payroll off your plate and focus your time where it really matters.

Let's make work easier for you and your team. Get started today with Homebase's all-in-one team management solution designed for small businesses and hourly teams. Sign up now and see how we can help streamline your operations.