Calculate what to reimburse employees for business driving in their own vehicles.
Mileage = business miles × rate per mile.
Total = mileage + tolls and parking.
A home care caregiver drives 420 business miles between clients in a month and pays $18 in tolls. At $0.70 a mile, the reimbursement is $294 plus $18, a total of $312.
Many employers reimburse at the IRS standard business mileage rate, which is published each year. The example uses 70 cents, the 2025 rate; enter the rate your policy uses.
Some states require reimbursement of necessary business expenses. Commuting between home and the regular workplace is generally not business mileage.
A plumbing company reimburses technicians who drive their own vans at a company rate of $0.62 a mile. One tech logs 1,135 business miles between service calls in a month and pays $42.50 for tolls and downtown parking. Mileage is $703.70, and the total reimbursement is $746.20.
Mileage is miles times the rate you enter, and tolls and parking are added at cost, so the total is only as good as the log behind it. Paying more than the IRS standard mileage rate can make the excess taxable, so check the current rate before setting yours. The calculator does not subtract normal commuting miles; take them out before you enter the total.
Reimbursements stay out of taxable wages when they are paid under an accountable plan, as defined in Treasury Regulation 1.62-2 and explained in IRS Publication 463. The plan needs a business connection for each trip, substantiation within a reasonable time, and return of any excess within a reasonable time. Under the IRS safe harbor, substantiation within 60 days of the trip and return of excess within 120 days are treated as reasonable. Payments that miss these tests are treated as wages, with withholding.
Your policy rate; many use the current IRS standard rate.
Generally not, but trips between job sites are business miles.
Not under an accountable plan at or below the IRS rate; check with your accountant.
In a mileage log with dates, purpose and miles.
Yes, but a flat allowance that is not tied to tracked miles is generally taxable wages, while per-mile reimbursement under an accountable plan with logs generally is not. If you switch to an allowance, run it through payroll.
Yes, trips between work locations during the day are business miles. The drive from home to the first site is usually personal commuting, though there are exceptions, such as travel to a temporary work location.
A fixed and variable rate plan pays a fixed amount for ownership costs plus a per-mile amount for operating costs. It has strict IRS conditions and suits companies with many drivers. Ask your tax adviser.
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