Mileage Reimbursement

Mileage reimbursement is money an employer pays an employee for using their personal vehicle for business travel. It helps cover the costs of driving for work, including fuel, maintenance, insurance, and depreciation.

With cents-per-mile reimbursement, the employer multiples the employee's business miles by a set per-mile rate. For example, if company pays $0.76 cents per business mile driven and an employee drives 1000 business miles, the company would pay them $760 (= 0.76 * 1000).

Other methods include car allowance, which provides a lump-sum payment instead of a per-mile rate, and fixed and variable rate (FAVR) reimbursement, which combines a fixed lump-sum payment with a per-mile rate.

Reimbursements are tax-free when they meet IRS accountable plan requirements.