The State Department determines overseas allowances and benefits under the Department of State Standardized Regulations (DSSR) for its own employees and, in some cases, for employees of other agencies. Tables of allowances are at

Foreign travel per diem allowances

The foreign travel per diem allowances provide for lodging, meals, and incidental expenses when an employee is on temporary duty overseas. While the State Department is responsible for setting foreign per diem rates, per diem travel policy, both foreign and domestic, is governed by the Federal Travel Regulation (FTR) and not by the DSSR. Employees should check their individual agency’s implementing regulations also. The FTR can be found at

Cost of living allowances

The cost of living allowances are those allowances that are designed to reimburse employees for certain excess costs that they incur as a result of their employment overseas. This group includes the post allowance (more commonly referred to as the COLA), foreign transfer allowance, home service transfer allowance, separate maintenance allowance, education allowance, and educational travel. Cost of living allowances are not considered a part of taxable income.

Recruitment and retention incentives—These allowances are designed to recruit employees to posts where living conditions may be difficult or dangerous. Post hardship differential, danger pay, and difficult to staff incentive differential (also known as service need differential) are all considered recruitment and retention allowances. They are included in taxable income.

Quarters allowances

Quarters allowances, which include the living quarters allowance, temporary quarters subsistence allowance, and extraordinary quarters allowance, are intended to reimburse employees for substantially all housing costs, either temporary or permanent, at overseas posts where government housing is not provided. These allowances are not included in taxable income.

Other allowances—Other allowances include official residence expense, representation allowance, evacuation related payments, and advance of pay.

Note: The IRS considers “incentive” allowances (post differential, danger pay, and difficult to staff incentive differential) as additional compensation; they are included in gross income for federal income tax purposes.

Other allowances under the DSSR are considered “reimbursements” for the extraordinary expenses due to a foreign assignment and are not taxed.