Does IRS Mileage Reimbursement Include Gas?

The Internal Revenue Service (IRS) provides a standard mileage rate to simplify deducting vehicle expenses for individuals and businesses. This rate offers a straightforward method to account for costs associated with using a vehicle for specific activities.

What the Standard Mileage Rate Covers

The IRS standard mileage rate includes the cost of gasoline. This comprehensive rate bundles several significant expenses into a single per-mile amount.

Beyond fuel, the standard mileage rate accounts for operational costs like oil, maintenance, repairs, tires, insurance, and depreciation. For leased vehicles, the rate covers lease payments, simplifying accounting. Parking fees and tolls are generally not included; these can often be deducted or reimbursed separately.

Different Standard Mileage Rates and Their Use

The IRS publishes distinct standard mileage rates annually, varying by travel purpose. These rates are updated each year to reflect changing costs and may be adjusted mid-year if significant fuel price changes occur.

There are several primary categories for which these rates apply. The business use rate is for travel related to one’s job or self-employment, covering trips to clients, meetings, or temporary workplaces. For medical purposes, a specific rate applies to travel to and from healthcare providers or for medical care. Another rate exists for certain qualified moving expenses, though this is primarily limited to active-duty military members under current tax law. Lastly, a charitable use rate is provided for travel performed for qualified charitable organizations, such as volunteering.

Record Keeping for Mileage

Accurate and contemporaneous record keeping is essential to substantiate mileage claims for either employer reimbursement or tax deductions. Without proper documentation, mileage claims may be disallowed during an audit. This diligent record keeping helps ensure compliance with tax regulations.

For each trip, taxpayers should record the date of travel and the destination. The purpose of the trip, such as “client meeting” or “doctor’s appointment,” must also be clearly documented. Recording the total miles driven for each trip or starting and ending odometer readings are also important. Methods for maintaining these records include traditional mileage logbooks, digital spreadsheets, or specialized mobile applications. These records should be kept for at least three years from the date the tax return was filed.