By If you use your personal vehicle for work-related purposes, you may be eligible for mileage reimbursement. But many people ask:
“What does mileage reimbursement cover?”
This article breaks down exactly what mileage reimbursement includes, how it’s calculated, and what you need to track to ensure fair compensation.
What Is Mileage Reimbursement?
Mileage reimbursement is a payment made by an employer to an employee to cover the cost of using a personal vehicle for business-related travel. This is often calculated using the standard mileage rate set by the IRS (Internal Revenue Service) in the U.S.
As of 2025, the IRS standard mileage rate is TBD (released annually in December of the previous year).
What Does Mileage Reimbursement Cover?
When an employer reimburses mileage using the IRS rate (e.g., $0.655/mile in 2024), the payment is meant to cover the total operational costs of owning and driving the vehicle.
Here’s what it includes:
Fuel (Gasoline or Diesel)
Even though fuel prices vary, the mileage rate accounts for average fuel costs across the country.
Vehicle Maintenance and Repairs
This includes oil changes, tire rotations, brake replacements, and general wear and tear.
Vehicle Depreciation
Driving reduces the value of your vehicle over time. The IRS rate includes depreciation as a major component.
Insurance
A portion of your car insurance premium is indirectly included in the mileage rate.
Tires and Parts Replacement
Over time, parts like tires, batteries, and wiper blades need replacing—these costs are accounted for.
Registration and Licensing Fees
Annual vehicle registration fees and inspection costs are factored into the IRS rate.
What Mileage Reimbursement Does NOT Cover
Not everything is included. Here are things typically not covered:
Commuting Miles
Travel from home to your regular workplace is not eligible for reimbursement.
Parking Fees and Tolls
Unless separately itemized or covered by company policy, these are not included in mileage reimbursement.
Traffic Tickets or Fines
You’re responsible for any citations you receive while driving for business.
Car Washes or Detailing
These are personal expenses unless your employer explicitly reimburses them.
IRS Standard Mileage Rate vs. Actual Expense Method
You can calculate mileage reimbursement using two methods:
| Method | Covers | Best For |
| Standard Mileage Rate | All-inclusive (gas, wear, insurance, etc.) | Simplicity and consistent use |
| Actual Expense Method | Tracks every actual vehicle-related expense | High-mileage drivers or luxury cars |
Most employers use the standard IRS rate for simplicity and tax compliance.
How to Track Mileage for Reimbursement
To qualify for reimbursement, keep accurate records that include:
- Date of trip
- Starting location and destination
- Purpose of trip (must be business-related)
- Total miles driven
Tools That Help:
- MileIQ
- Everlance
- TripLog
- Built-in vehicle odometer logs
Always check your employer’s policy or local tax authority for reporting rules.
Mileage Reimbursement for Self-Employed and Freelancers
If you’re self-employed, you can deduct business mileage on your tax return using:
- The standard mileage deduction, or
- The actual cost method
Just like employees, you must keep detailed logs to claim deductions legally and accurately.
Do Employers Have to Reimburse Mileage?
In the U.S.:
- No federal law mandates mileage reimbursement for employees.
- However, some states (e.g., California, Illinois) require employers to cover necessary business expenses, including mileage.
Check your local labor laws or company handbook for policies.
Benefits of Mileage Reimbursement
- Reduces out-of-pocket expenses for employees
- Encourages fair compensation for personal vehicle use
- Helps businesses stay compliant with tax laws
- Offers an easy way to estimate costs for project-based travel
Conclusion
So, what does mileage reimbursement cover?
It covers all the costs of owning and operating a vehicle for business use, including fuel, maintenance, insurance, depreciation, and more—bundled into one per-mile rate.
Whether you’re an employer setting up a policy or an employee logging trips, understanding what’s included ensures transparency, accuracy, and compliance. Always track your miles and refer to the latest IRS rate or your local laws to stay on top of reimbursements.
FAQs
1. Does mileage reimbursement include gas?
Yes. The IRS standard mileage rate covers gas along with other operating costs like maintenance and insurance.
2. Is commuting included in mileage reimbursement?
No. Travel from home to your regular workplace is considered personal and is not reimbursable.
3. Do I need receipts to claim mileage reimbursement?
Not for the standard mileage rate. You need a log of miles driven, dates, and trip purpose, but not gas receipts.
4. Can I claim mileage for Uber or delivery jobs?
If you’re a contractor (e.g., Uber, DoorDash), yes—you can claim mileage on your taxes if properly logged.
5. How do I calculate mileage reimbursement for 2025?
Multiply your business miles driven by the IRS mileage rate for 2025 (to be announced). Example: 500 miles × $0.65 = $325.
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