What is Mileage Reimbursement?

Mileage reimbursement is a payment made by an organization to an employee, volunteer, or self-employed individual to cover the costs of using their personal vehicle for business purposes. This is a common practice to compensate for expenses like fuel, maintenance, insurance, and vehicle depreciation without requiring a detailed breakdown of every cost.

The IRS Standard Mileage Rate

In the United States, the Internal Revenue Service (IRS) sets a standard mileage rate each year that businesses can use to calculate the deductible costs of operating a vehicle for business. Many companies adopt this rate for their employee reimbursement policies because it is straightforward and meets IRS requirements for accountability.

The rate for 2024 is 67 cents per mile. This rate is not just for fuel; it's designed to cover all variable and fixed costs of owning a car. To see how much of that is actual fuel expense, you can use our Fuel Cost Calculator.

How to Keep an Accurate Mileage Log

For your reimbursement to be considered non-taxable income by the IRS, you must keep an accurate and timely log. A proper mileage log should include:

• The date of each trip.
• Your vehicle's starting and ending odometer readings.
• The total distance traveled.
• The starting point, destination, and business purpose of your trip.

This calculator is a great tool for adding up the numbers from your log at the end of an expense period.

Vehicle Ownership and Costs

Mileage reimbursement helps offset the significant costs of owning a vehicle. When you're considering a new car purchase, remember to factor in not just the monthly payment but also these running costs. Our Loan & Mortgage Calculator can help you estimate the financing, while this tool helps you understand the operational costs you might be able to recover.