Calculating your mileage reimbursement is not a particularly difficult process. In this short read, we’re going to show you how to easily calculate your mileage reimbursement.
With that said, your employer may use a different mileage rate than the standard IRS rate. As discussed in our previous article, if you are reimbursed for more than the IRS rate, it will be considered income and will be taxed as such.
How Businesses Use The IRS Standard Mileage Rate To Calculate Reimbursements & Tax Deductions
There are two major scenarios that company owners should think about regarding mileage reimbursement. It all comes down to whether your employees are using their personal vehicles or a vehicle provided by the company.
Related: Why TripLog is the Best Mileage Tracker App (2024 Comparison)
Let’s say an employee drove 200 miles for business using their personal vehicle. In this scenario, let’s also assume the company is using the 2024 standard IRS mileage rate of 67 cents per mile.
Below is a simple reimbursement calculation using this rate:
- reimbursement amount = miles * rate
- $134.00 = 200 miles * $0.67
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.
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.
$0.67 * 100 miles = $67.00
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.
