If you use your personal car for work, you may be receiving mileage reimbursement for your miles driven from your company. In this short read, we’re going to show you how to easily calculate your mileage reimbursement.
Many employers use the IRS standard business mileage rate as their benchmark. It’s a rate that the IRS uses for self-employed workers to deduct their mileage on their taxes, but it’s determined via an annual analysis of the various costs that go into using one’s personal vehicle for work.
However, some businesses may choose to reimburse more or less than that rate depending on their individual circumstances, or use a different reimbursement method entirely. If you are reimbursed for more than the IRS rate, it will be considered income and will be taxed as such.
Mileage Reimbursement Formula Explained
The formula to calculate an employee’s mileage reimbursement is simple:
business miles * reimbursement rate = reimbursement amount
For example, if you drove 200 miles for work and your company uses the 2026 IRS rate of $0.725 per mile, your reimbursement would be $145.00. So:
200 * 0.725 = $145
That’s the core calculation. However, there are some nuances to consider.
How to Calculate Your Mileage Reimbursement Step-by-Step
Step 1: Track your mileage
The first thing you should be doing is tracking your mileage. This can be done from simply writing down odometer readings during business drives, using paper mileage logs, or using automatic mileage tracker apps.
Related: IRS Mileage Log Requirements
Reimbursable mileage generally includes things like driving to client meetings, traveling between job sites, or conducting work-related errands. Ask yourself: was this trip made to perform a work-related task?
Some companies may require more detail than others in order to substantiate mileage for reimbursement. Generally however, the date, time, and reason for the trip are required by employers to be documented as well.
Step 2: Exclude commutes and personal miles
In general, your commute from home to work and back does not count as reimbursable mileage. That is considered personal mileage.
Things like personal errands don’t count either. If a trip mixes business and personal driving, only the business portion should be included in your reimbursement calculation.
If you’re tracking manually, you may still need to log your personal miles. Many mileage tracker apps do the work of excluding commutes and personal automatically via auto-categorization rules.
Step 3: Find your company’s reimbursement rate
While much of what you may read about mileage reimbursement will refer to using the IRS standard mileage rate, that may not be the rate your company uses.
Some employers choose to reimburse at that rate for simplicity, though others may use custom rates, flat car allowances, or more precise (and complex) methods like FAVR.
Before you do any math, make sure you know which rate or method your company actually uses. If you know your employer uses the 2026 IRS business mileage rate (as is most common), that rate is 72.5 cents per mile.
Now let's say your employee uses a vehicle provided by your company and they drove the same 200 miles. Since the employee does not need to worry about the vehicle's depreciation, you wouldn't use the IRS standard mileage rate here.
Here, it's up to your company to decide what you feel is fair to reimburse. Let's say your company set the rate at 25 cents per mile. You would use the same equation, but the total reimbursement will be different.
- reimbursement amount = miles * rate
- $50 = 200 miles * 25 cents
If you drive your personal vehicle for work, you will be reimbursed more. With that said, this comes with the trade-off of more wear and tear on your car.
Note: the standard IRS mileage rate is not the only option for reimbursement. Companies can implement, for example, a fixed and variable rate (FAVR) plan as well.
Related: What Do Most Businesses Pay for Mileage Reimbursement?
Calculating Your Reimbursement When Using Your Vehicle For Both Business and Personal Use
If you use your vehicle for both business and personal use, it will be important to differentiate the mileage accumulated. This makes it easier to know what to claim for depreciation and other costs related to operating your vehicle.
Related: What To Do If You Forget To Track Your Mileage
Let's say that you’ve driven your car 300 miles for personal reasons (commutes, etc.) within a given period. Within that same time frame, let's say you also drove a total of 100 miles for business purposes using the same vehicle. In this example, you have driven for 400 total miles.
Calculating Business vs. Personal Mileage
You can calculate the percentage of how many business miles you've driven by dividing the business miles by the total miles (100/400=0.25). In this example, business mileage accounts for 25% of your total mileage.
To calculate your mileage reimbursement, you can take your total business miles and multiply them by the standard IRS mileage rate.
$0.725 * 100 miles = $72.50
Track and Calculate Your Mileage The Right Way
Sure, you could do the calculations on your own, but using a mileage tracker app like TripLog will save you untold amounts of time and effort. TripLog covers all the aspects of tracking, calculating, and reporting mileage, much easier than ever before.
TripLog is the best company mileage tracking solution on the market. Download our app for free on iOS or Android today to see for yourself, or schedule a complimentary live web demo.
