How Much To Reimburse Employees For Mileage
The IRS sets mileage rates for employees who operate their own personal vehicles at work (they also set rates for charitable, medical, and moving purposes).
What sometimes confuses people about this is that the IRS sets a mileage rate, but does not mandate reimbursement by the employer. Many employers think they have to reimburse mileage but, in reality, they don’t.
The IRS rate is a guideline for employers and a tax deduction opportunity for employees.
A company can reimburse its employees whatever it wants – from zero cents per mile to well over the IRS maximum. There is no law mandating how much or how little to reimburse employees. But this doesn’t mean that the employee might get short changed. Whatever amount an employer does not reimburse, employees can deduct on their taxes.
Nevertheless, if employers choose not to reimburse mileage, it might not be too easy to get employees to run their errands!
While businesses can reimburse employees any rate of their own choosing, a BLR Survey found that 73% of respondents (144 in total) actually reimbursed employees the max IRS rate.
IRS Standard Mileage Rate for 2012
The standard mileage rate for the first half of 2011 was .51 cents/mile. Due to increased gas prices, however, the IRS increased the rate slightly to 55.5 cents/mile.
Use Expense Sheets to Calculate Mileage
Reimbursing mileage with expense software like Timesheets.com allows you to use whatever rate you like.
The administrator sets the rate, employees enter their miles, and the software calculates the total. Employees and Administrators can both run reports at the end of the year for totals.