City By City or Standard Daily?
There are two ways to calculate your per diem allowance- standard daily rate and city by city. Each has its advantages. Domestically, either method might yield the best result however if you fly a lot of international pairings, city by city is clearly the best option.

Per diem rates are broken down into three parts- CONUS (domestic), OCONUS (Hawaii, US territories, etc.) and International. Several per diem allowance rates exist, and it is important to choose the correct one.

For example, Aspen (ASE) currently has a $288 per diem allowance (during ski season of course), but this includes lodging which is typically paid for by the airline. The amount associated with Meals and Incidentals Expense (M&IE) is only $71 per night. This is using the city by city method. Conversely, the standard daily rate is currently $52, and it changes slightly for Oct-Dec and international destinations.

This allowance will automatically get adjusted to a 3/4-day for the beginning and end of your trip, and your last overnight will be used to compute the per diem for the last day of your trip. Regardless of what you have read in IRS Publication 463, the Tax Court and industry practices automatically apply the 3/4-day convention to the first and last day.

Here are some examples-

As you can see, each method has its advantages. If you fly to a lot of smaller cities, generally speaking the standard daily rate is preferred versus a mix of larger and smaller cities. If you fly internationally even occasionally, the city by city method is generally preferred. Heck, LHR is over $180 per night.

You can only use one method for the entire tax year. In other words, you cannot switch back and forth between pairings. We compute your per diem using both methods, and use the per diem allowance with the greatest deduction.

How does per diem affect your taxes?
Most domestic crewmembers who work an average of 15 days per month will have a per diem allowance of around $9,000. Let's say your airline reimburses approximately $5,500.

So the portion that is not reimbursed is $3,500. Because you are Department of Transportation (DOT) employee, we multiply this number by 80% (if you were not a DOT employee, it would be reduced by 50% instead of 20%, so you got that going for you).

Therefore your per diem deduction is $2,800 (80% of $3,500) which at a tax rate of 15% equals $420 in your pocket. International crewmembers can easily see a $10,000 deduction which is $1,500 in your pocket.

Seniority is everything as they say.

CONUS Per Diem Rates (GSA)	CONUS Per Diem Rates (DOD)
Fiscal Year 2013	Fiscal Year 2013
Fiscal Year 2012	Fiscal Year 2012
Fiscal Year 2011	Fiscal Year 2011
Fiscal Year 2010	Fiscal Year 2010
Fiscal Year 2009	Fiscal Year 2009

Int'l, Hawaii and Alaska Per Diem Rates (DOD)
2012: Q1 Q2 Q3 Q4
2011: Q1 Q2 Q3 Q4
2010: Q1 Q2 Q3 Q4
2009: Q1 Q2 Q3 Q4

* No longer being updated. IRS advises taxpayers to use the US GSA Office.