How to Calculate Mileage for Reimbursement

Mileage reimbursement allows individuals to recover costs incurred when using a personal vehicle for business-related travel or to claim tax deductions. Understanding how to calculate and document these expenses is important for accurate accounting. Diligent record-keeping ensures compliance with tax regulations and facilitates smooth reimbursement processes.

Eligible Travel for Reimbursement

Mileage eligible for reimbursement or deduction must directly relate to business activities and differs from personal travel, such as a regular commute. Qualifying business travel includes trips between different workplaces, visits to clients or customers, and attendance at business meetings or conferences away from a regular office. Driving for work-related errands, like going to a supply store or post office, also falls under eligible mileage.

Travel from a home office, if it serves as the principal place of business, to another work location or client site is considered business mileage. However, the daily drive from home to a permanent workplace is a personal commuting expense and is not eligible for reimbursement or tax deduction. The Internal Revenue Service (IRS) outlines these distinctions in Publication 463.

Methods for Tracking Mileage

Accurate mileage tracking is important for substantiating claims for reimbursement or tax deductions. One common method involves maintaining a manual logbook, where each business trip is recorded with the date, starting and ending odometer readings, destination, and the specific business purpose. Consistent recording of these details ensures the log’s reliability.

Many individuals use mobile applications for mileage tracking, often leveraging GPS technology to automatically record trips. These apps can categorize travel as business or personal and provide detailed reports. Vehicle tracking devices offer another option, continuously monitoring movement and allowing users to designate trips for business. Regardless of the method chosen, maintaining accurate and timely records is necessary for compliance.

Applying the Standard Mileage Rate

The IRS provides an optional standard mileage rate, which simplifies vehicle cost calculation by offering a fixed amount per mile. This rate covers all fixed and variable costs of using a vehicle, including fuel, maintenance, repairs, insurance, and depreciation. For the 2025 tax year, the standard mileage rate for business use is 70 cents per mile.

To calculate the reimbursement or deduction using this method, multiply the total eligible business miles driven by the applicable standard mileage rate. For instance, 100 business miles driven in 2025 would result in a $70 claim. Current and past rates are available on the IRS website. While some employers may use their own reimbursement rates, the IRS standard rate serves as a benchmark, particularly for tax purposes.

Documenting Your Mileage

Detailed documentation is important for substantiating mileage claims, whether for employer reimbursement or potential tax deductions. An IRS-compliant mileage log should include specific information for each trip, such as:
Date of the trip
Starting location and destination
Total miles driven for that trip
Clear description of the business purpose

Record the vehicle’s odometer readings at the beginning and end of each tax year. This comprehensive record-keeping is important for audit purposes, as the IRS requires adequate records to prove the accuracy and business necessity of claimed expenses. Maintaining these records contemporaneously (as travel occurs) strengthens their credibility and helps meet employer requirements for expense reporting.