There are 2 separate rates: Lodging, & Meals & Incidental Expenses. Because the company directly provides our lodging, our per diem falls only under the M&I category. There is a standard rate, as well as individual rates for more expensive locations. To figure your personal per diem allowance, you have to add up all your layovers for the year & add the collective rates for all layover cities. Back in my regional days, our per diem was low enough that it was worth it to go through all of that each year and claim a couple grand in write offs for what I was being underpaid. (Currently, our rates at United are pretty much right at the standard rate, though slightly below higher cost localities.)

Technically, if we were making much more in per diem, we should be doing the same thing in reverse. (I.e., calculating our total allowance & reimbursing the feds for tax-free funds received in excess of that.) Because it’s a complicated process, I think the only way you would get into trouble would be on an audit; but if our contract rates suddenly went up by, say $1/hr, I don’t think it would be long before someone in the IRS developed a penchant for flagging UAL pilot tax returns.

In short, the myth that per diem increases are an easy tax-free alternative to wage rate increases is only true to a point, & I think we’ve basically reached that point already. Any significant increases to our per diem would probably start creating bigger tax headaches for us.