Publication date (21 April 2025)
Looking for a clear, up-to-date guide on mileage reimbursement in 2025? You’re in the right place!
Whether you’re using your personal vehicle for work-related travel and need to be reimbursed by your employer, or you’re self-employed and planning to claim a tax deduction, this guide will walk you through everything you need to know.
We’ll cover current IRS mileage rates, what qualifies as business mileage, and how to track and report it—all in simple, straightforward terms.
What is Mileage Reimbursement?
Mileage reimbursement is the compensation you receive for using your personal vehicle for business-related travel. It typically applies to cars, vans, pickups, and panel trucks, and is calculated based on a per-mile rate set by the IRS.
This reimbursement is designed to cover the costs associated with business use of your vehicle—including fuel, maintenance, repairs, insurance, registration, and depreciation. However, it does not apply to personal or commuting mileage.
If you’re an employee, your employer may reimburse you for eligible business travel. If you’re self-employed or an independent contractor, you can deduct qualifying business mileage on your taxes. For employers, reimbursing employees for business mileage is generally considered a deductible business expense.
2025 Mileage Reimbursement Rates by Region
If you use your personal vehicle for qualified purposes—such as business, charitable work, medical appointments, or moving (for eligible military personnel)—you may be eligible to receive mileage reimbursement or claim a tax deduction.
The IRS has set the following standard mileage rates for 2025:
- Business Use (Self-Employed or Employer-Reimbursed): 70 cents per mile
- Charities: 14 cents per mile
- Medical Travel: 21 cents per mile
- Moving (Military Only): 21 cents per mile
These rates apply nationwide and are used to calculate deductible vehicle expenses when you opt to use the standard mileage method instead of tracking actual expenses. Keep in mind, moving expense deductions are limited to active-duty military members who meet certain criteria.
While these are federal rates, some employers or states may offer different reimbursement rates, so it’s worth checking local policies or company guidelines for region-specific rules.
Mileage reimbursement policies vary around the world, with each country setting its own standard rates and rules for business-related vehicle use. While the U.S. uses IRS-set mileage rates, other countries often rely on government guidelines or employer-specific policies.
What Kind of Travel Qualifies for Mileage Reimbursement?
Mileage reimbursement only applies to miles driven for business-related purposes. According to the IRS, business mileage includes travel between two work locations—either permanent or temporary.
Examples of qualifying business travel include:
- Driving from your primary workplace to a temporary work site
- Traveling directly from your main job to a second job
- Commuting between a temporary work site and your second job
- Driving from home to a temporary work location, as long as your main job is elsewhere
The following trips do not qualify as business mileage:
- Your regular travel between home and your primary job
- Traveling from home to your second job
Notes:
A regular job location is your main workplace—either your own business or your employer’s office.
A temporary work location is a site you’re assigned to for one year or less, away from your regular job location.
A second job location is another workplace (possibly with a different employer) where you work on the same days as your main job.
Who Qualifies for Mileage Reimbursement?
For Employees:
If you use your personal vehicle for business purposes, you may be eligible for mileage reimbursement from your employer. While federal law does not require employers to reimburse mileage, some states—like California, does have laws that mandate it.
Reimbursement Methods Employers May Use:
- Standard IRS Mileage Rate
This rate (70 cents per mile for 2025) covers both fixed and variable vehicle costs. It’s typically paid after you submit a detailed log of your business mileage.
- FAVR (Fixed and Variable Rate)
This method splits reimbursement into two parts: one covering fixed costs (like insurance and registration), and another for variable costs (like gas and maintenance).
- Monthly Mileage Allowance
A set amount is paid at the beginning of each month to cover estimated business driving expenses. It offers convenience but must still stay within IRS guidelines.
Important Notes on Reimbursement:
- Any reimbursement exceeding the IRS standard rate may be considered taxable income.
- For a reimbursement program to remain tax-free, it must follow IRS rules precisely.
- Under the Tax Cuts and Jobs Act, employees cannot deduct unreimbursed mileage on their taxes, even if their employer doesn’t offer reimbursement.
You Need to Track Keeping Records:
To receive mileage reimbursement, you’ll need to keep accurate records for every business trip. Your mileage log should include:
- The date of the trip.
- Start and end locations.
- The purpose of the trip.
- Total miles driven.
Some employers may request additional details, so it’s a good idea to check their specific requirements before you start tracking.
For Self-Employed Individuals:
If you’re self-employed, you can deduct mileage related to business travel on your tax return. When you use your vehicle exclusively for business, you can write off all associated expenses. If the vehicle is used for both personal and business purposes, only the business portion is deductible.
Two Ways to Calculate Your Mileage Deduction
The IRS allows self-employed individuals to choose between two methods to calculate vehicle-related deductions:
- Standard Mileage Rate Method
This is the simpler option. You multiply your business miles by the IRS standard rate (70 cents per mile in 2025). To use this method, you must keep a detailed mileage log that tracks each business trip’s date, destination, purpose, and distance.
- Actual Expenses Method
This approach lets you deduct the actual costs of operating your vehicle for business, including gas, maintenance, insurance, registration, depreciation, and more. It requires detailed recordkeeping and receipts for all related expenses throughout the year.
Annual Deduction Requirements
You can claim mileage deductions annually on your tax return, but it’s essential to maintain thorough documentation to support your claim in case of an audit.
For Employers:
Although you’re not legally obligated to reimburse employees for mileage in most cases, doing so is generally expected and can help position your company as a more attractive employer.
Using the Per-Mile Reimbursement Method
Among the various ways to handle mileage reimbursement, the most straightforward is to follow the IRS standard mileage rate, which is 70 cents per mile in 2025.
Employees typically submit their mileage logs each month to document their business-related travel, and you reimburse them based on the total miles driven. These reimbursements are not treated as taxable income, as they are not considered employee benefits. You can deduct these payments as a business expense.
Keep in mind that while the IRS publishes a recommended rate annually, you’re not required to use it. You may choose to offer a higher or lower reimbursement rate, though anything over the IRS rate may be taxable.
Alternative Reimbursement Options
Besides the per-mile method, employers can also explore:
- Car Allowances – A set amount paid regularly to cover vehicle use
- FAVR (Fixed and Variable Rate) – A reimbursement model that separately accounts for fixed expenses and variable driving costs
Simplifying the Process
If multiple team members submit mileage for reimbursement, implementing a team mileage tracking system can streamline the process, reduce administrative work, and ensure accuracy in reporting.
What Counts as Business Travel Mileage?
Not all travel qualifies for business mileage reimbursement. To be eligible, the trip must go beyond your regular commute and be directly related to work duties. Here’s a breakdown of what counts—and what doesn’t.
Eligible Mileage Examples
Employees can claim business mileage for travel that is clearly work-related, including:
Travel from home to a client or off-site meeting
If the distance to the meeting location exceeds your regular commute, you can claim the difference. For instance, if your usual commute is 4 miles, but the meeting location is 16 miles away, you may claim 12 miles—a method commonly referred to as “offset mileage”.
Travel to a temporary workplace
A temporary workplace qualifies for mileage claims under the following conditions:
- You work there for less than 24 hours, or
- You spend less than 40% of your working time there
Business-related errands and trips
These include traveling to pick up supplies, attend off-site training, or visit another company location—all of which typically qualify as deductible business mileage.
According to HMRC guidelines, tax relief is available when:
- The journey is necessary to carry out work duties, or
- The employee must travel to a site that is not their regular workplace
Ineligible Mileage
The following types of travel do not qualify for reimbursement or tax deductions:
Commuting from home to your regular workplace
This daily travel is considered personal and is not eligible, even if work is conducted during the trip.
Travel from home to a second job
If you work multiple jobs, commuting between your home and any of those job locations doesn’t count as business mileage.
Personal errands or detours during a business trip
Only the direct portion of the journey related to work is eligible.
How to Track Mileage for Reimbursement
While the IRS doesn’t mandate a specific method for tracking mileage, it does require accurate records of each business trip. You’ll need to log either:
- Your odometer readings at the start and end of each trip, or
- Trip details using a GPS device or mileage tracking app
Manual Tracking
You can keep a physical logbook or spreadsheet, noting:
- Start and end mileage.
- Trip date.
- Destination and purpose.
- Total miles driven.
This method works best for occasional drivers but can be time-consuming and prone to error if not updated regularly.
Digital Tools & Apps
The easiest and most IRS-compliant option is to use a mileage tracking app. These apps often automate the process by using GPS to detect trips, categorize them, and generate ready-to-submit reports.
One popular option is Driversnote, available on both iOS and Android. It supports users who are self-employed as well as those employed by companies.
Other similar tools include:
These apps offer automatic tracking, cloud backups, and easy export options, making tax time or reimbursement claims much simpler.
How to Calculate Mileage Reimbursement Manually
If you’d like to calculate your mileage reimbursement or tax write-off manually, follow this straightforward method:
Example:
Suppose you drive your car for both business and personal use, and you keep a mileage log to track your business-related miles. Let’s say your records show that you drove 7,000 miles for business between January 2025 and May 2025.
To calculate your total mileage reimbursement, simply multiply the number of business miles driven by the IRS mileage rate for 2025.
7,000 miles × $0.70 (2025 IRS mileage rate) = $4,690
This means you could be reimbursed for $4,690 based on your business mileage.
Important Notes:
- Maintain an accurate mileage log that details each trip, including the date, destination, purpose, and mileage.
- Be ready to provide proof of your mileage if requested by your employer or the IRS.
Corporate Mileage Reimbursement Policy
An effective mileage reimbursement policy is essential for ensuring a smooth and transparent process for employees using their personal vehicles for business purposes. It helps remove uncertainty and ensures compliance with tax regulations, providing clarity on both employee and company responsibilities.
Some countries, like the U.S., have made mileage reimbursement policies a formal obligation, requiring businesses to establish an accountable plan. These frameworks ensure that business expenses are properly claimed and documented, ensuring tax compliance.
1. Introduction to Mileage Reimbursement
This section sets the tone for the policy, providing clarity on the fundamental principles of mileage reimbursement:
The policy should emphasize that mileage reimbursement extends compensation to employees using their private vehicles for business use.
- Definition of Personal Vehicles:
The term “personal vehicle” includes cars, vans, and bikes, as long as they are registered to the employee making the claim. This does not include company cars or vehicles rented for business purposes.
It’s essential to clarify what constitutes a business trip:
- The normal commute between home and the usual workplace does not qualify.
- The trip must have a direct business purpose.
- Any trip combining personal and business errands does not qualify for reimbursement unless the primary purpose is business-related.
Note: Use definitions provided by national revenue agencies (e.g., IRS) to ensure clarity and compliance. In the U.S., for example, the IRS states that a reimbursable trip must be “ordinary” (common and accepted in the business) and “necessary” (helpful and appropriate).
2. Provide Specific Examples
To further clarify what constitutes a business trip, include specific examples in your policy:
- Examples of Business Travel:
- Visits to client sites.
- Meetings with clients, both current and prospective.
- Supplier visits for business needs.
- Traveling to purchase business supplies.
- Attending business conferences or events.
These examples help employees understand exactly what types of trips qualify for reimbursement and how to deduct personal commuting miles. For example, if an employee drives 50 miles to a conference, but their normal commute is 10 miles, they would only be reimbursed for 80 miles (50 miles - 10 miles for the commute).
Note: Include as many specific examples as possible to help employees understand what is reimbursable and avoid confusion.
3. How the Rate is Calculated
Once the eligible trips are defined, you need to explain how the reimbursement rate is calculated:
Most companies use a rate set by the national revenue agency (e.g., the IRS rate in the U.S. is $0.56 per mile). This rate covers all the costs associated with operating a vehicle (fuel, depreciation, maintenance, etc.).
- Alternative Methods (e.g., Fixed and Variable Rate Allowance):
You can also opt for a different method like the Fixed and Variable Rate (FAVR) method, which provides a core monthly allowance for fixed costs (e.g., insurance, registration) and a variable allowance based on the actual costs incurred in the employee’s location (e.g., fuel, repairs).
If an employee drives 1,000 miles for business, and the mileage rate is $0.56 per mile, the total reimbursement would be:
1,000 miles x $0.56 = $560
Important Consideration:
Employees should be informed about the costs covered by the mileage rate, such as taxes, maintenance, and depreciation. If you decide to use a mileage rate above the standard rate, inform employees that the excess will be taxable income and subject to tax deductions. If the rate is lower, employees may be eligible to claim the difference when filing their tax returns.
Note: Clearly specify whether costs like parking tickets, tolls, or congestion charges are reimbursable and how employees should file these additional expenses.
4. How to Submit Mileage Reimbursement Claims
Now that employees are familiar with their entitlements and duties, it’s time to guide them through the process of submitting their mileage claims.
We suggest encouraging employees to maintain a detailed mileage log to track their business-related vehicle trips. This log will serve as the basis for their expense reports. Even if they aren’t based in the U.S., it’s a good idea for employees to record the following key information:
- The time and date of each trip.
- The total miles traveled (odometer readings are helpful for tracking mileage).
- The destination of the journey.
- The purpose of the trip.
Note: Consider providing employees with a standard mileage reimbursement form to complete when submitting their business mileage claims. This ensures consistency and helps streamline the process.
FAQs
What is the mileage reimbursement rate for 2025?
The standard mileage rates for 2025 are: Self-employed and business: 70 cents/mile. Charities: 14 cents/mile. Medical: 21 cents/mile
Can I claim mileage for commuting?
No, you cannot claim mileage for your regular commute between your home and your main place of work. The IRS and most tax authorities consider commuting to be a personal expense, not a business one.
However, you can claim mileage if you’re:
- Traveling from your home to a temporary work location (under certain conditions).
- Driving between multiple job sites or between jobs.
- Going from your main office to a client or off-site meeting.
Basically, to be deductible or reimbursable, the trip must be work-related and beyond your normal commute.
Do I need receipts to claim mileage?
No, you don’t need receipts to claim mileage, but you do need a detailed mileage log.
To comply with IRS (or other tax authority) requirements, your mileage log should include:
- Date of each trip.
- Purpose of the trip (e.g., meeting with a client).
- Starting point and destination.
- Total miles driven.
While receipts for fuel or car maintenance aren’t necessary when using the standard mileage rate, they may be required if you choose to use the actual expense method instead.
Tip: Use a mileage tracking app to automatically log your trips—it makes record-keeping way easier and audit-proof.
References