Find the Right Reimbursement Method for Your Team
There’s no one-size-fits-all approach to mileage reimbursement.
While the IRS standard mileage rate recommendation works for most businesses, the best method for yours can depend on your team size, where they drive, and how much complexity you’re willing to manage.
Here’s what’s available.
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Mileage reimbursement isn’t federally required in most states, but companies that offer it attract better talent and stay competitive.
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If using personal vehicles causes an employee’s pay to fall below minimum wage, reimbursement becomes mandatory.
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The 2026 IRS standard mileage rate is 72.5 cents per mile, covering gas, maintenance, insurance, depreciation, and other vehicle costs. Reimbursements at or below this rate are tax-free for employees.
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Choosing the wrong reimbursement method costs companies thousands per employee annually through overpayments, administrative overhead, and tax complications.
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Manual mileage logs lead to over-reporting by as much as 28%, costing companies an average of $1,800+ per driver every year.
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TripLog’s automatic mileage tracking eliminates fraud and errors by recording exact distances and accurate reimbursements regardless of which method you choose.
Cents-Per-Mile Reimbursement
CPM is the most common reimbursement method. Simply reimburse employees a fixed rate for every business mile they drive!
Most companies use the recommended IRS standard mileage rate (72.5 cents per mile in 2026), which keeps reimbursements tax-free and calculations simple.
If a driver drives 100 business miles in their personal vehicle, you would reimburse them $72.50.
Best for: Teams where drivers cover similar distances and incur similar costs.
FAVR (Fixed and Variable Rate)
FAVR combines a fixed monthly payment (covering insurance, depreciation, registration, etc.) with a variable rate (covering things like fuel and maintenance).
The rates adjust based on where your employees drive, making it fairer for teams spread across different regions.
This method is a lot more complex to set up and manage than methods, but it can be more accurate than methods like cents-per-mile for large, geographically diverse teams.
Best for: Larger organizations with employees driving in multiple states or regions with significantly different vehicle costs.
Need help choosing the right method for your team?
Talk to a TripLog mileage expert and we'll help you figure out which reimbursement approach makes the most sense for your business!
Car Allowance
With car allowance, you give your employees a fixed monthly stipend to cover all vehicle-related costs.
Here, mileage tracking isn’t necessarily required (though tracking may help you determine the right allowance amount).
While this is by far the simplest method to manage, it can lead to overpaying low-mileage drivers and underpaying high-mileage drivers. Plus, car allowances are taxed as income, which reduces what employees actually receive.
Best for: Small teams with predictable driving patterns, or companies that want minimal administrative overhead.
Actual Expense Reimbursement
With this method, you reimburse employees for the actual costs they incur.
Gas receipts, oil changes, maintenance, insurance, and more. Employees submit documentation for each expense, and you reimburse them for the verified amounts.
This is the most accurate method since you’re paying for real, actual costs, but it requires significant administrative work. Employees need to save every receipt, and your team needs to review and approve each one.
Best for: Small teams with infrequent driving, or situations where you need detailed expense tracking for specific projects or clients.
Understanding Accountable Plans
An accountable plan isn’t a reimbursement method. It’s the IRS framework that makes your reimbursements tax-free for employees and tax-deductible for your company.
To qualify as an accountable plan, reimbursements must be for business expenses, employees must provide timely documentation, and any overpayments must be returned. This applies to cents-per-mile, FAVR, and actual expense methods.
Without an accountable plan, reimbursements are treated as taxable income, which means employees receive less and your company loses the tax deduction.
Fuel Cards
Some companies simply provide employees with company fuel cards that cover gas purchases only.
This can be simple to manage and eliminates the need for gas receipts, but it doesn’t cover other vehicle costs like maintenance, insurance, or depreciation.
Fuel cards are often used alongside other reimbursement methods. For example, a fuel card for gas plus a reduced mileage rate to cover wear and tear.
Best for: Companies that want to simplify fuel reimbursement while using another method to cover remaining vehicle costs.
Company Fleet Vehicles
If your company provides vehicles to employees, you won’t need to reimburse mileage, but you’ll still need to track usage, maintain vehicles, and monitor costs.
Fleet management requires tracking vehicle assignments, maintenance schedules, fuel consumption, and potentially business vs. personal use for accurate tax reporting.
Best for: Companies with consistent driving needs where providing vehicles makes more financial sense than reimbursing personal vehicle use.
Start tracking mileage the right way
It only takes a few minutes to get your team tracking. Create your free account, invite your drivers, and watch as their trips start flowing into your dashboard automatically.