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Tag: mileage

The New Mileage Rate for 2021

If you’re an employer in the United States, it’s likely that you pay your employees mileage reimbursement when they’re traveling for work purposes. Every year, the  IRS adjusts the mileage reimbursement rate based on examination of variable costs. Based on the latest study, the IRS has changed 2021’s mileage rate to a lower rate than last year. Taxpayers will use this rate to compute their deductible costs associated with using a vehicle.

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Business Math: How to Calculate the Cost of Gas for Traveling

Knowing the cost of your travels, whether for work or personal reasons, is very important. Some people focus mainly on the federal reimbursement rates to gauge how much their remuneration will be, but being able to calculate your actual expenses in advance is equally as important. Calculating the cost of gas before you leave is a great way to budget yourself by simply finding out how much this trip will cost you.

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New Mileage Rate for 2020

Editor’s Note: To view the mileage rate information for 2021, please go here.

If you’re an employee or employer, you’re probably aware that a lot of things change in the beginning of each year. This year, for instance, we’ve already seen changes to the US overtime policy new salary history bans in Ohio, New York, and New Jersey, and changes to Form W-4. Of course, to keep us on our toes, the IRS has placed a new regulation upon us. On December 31st, 2019, the IRS released the new standard mileage rate for the year 2020. Their official notice explains the rules of the optional standard mileage rate within the next year. Taxpayers will use this rate when computing deductible costs when using a vehicle for business, charitable, medical, or moving expense purposes. 

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Driving Costs that the IRS Mileage Rate Covers

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You’ve seen the mileage reimbursement rate that the IRS publishes each January but do you know where the number comes from? Many people think the rate is based on gas prices alone but if that were the case, mileage reimbursement would be much lower than the published rate. If your car gets 27 miles to the gallon, for example, then rather than reimbursing 54 cents per mile, you’d be reimbursing more like 10 cents!

Actually, the reimbursement rate per mile is figured from various factors associated with owning, driving, and maintaining a vehicle.

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When Employers Have To Reimburse Employee Expenses and Mileage

have to reimburse employee expenses

While federal law does not require employers to reimburse employee expenses and mileage, some states, such as California, do. Furthermore, federal law does require that employers pay minimum wage. When the cost of the expense causes the employee to drop below the minimum wage, the employer does have to reimburse mileage and expenses.

If you need to reimburse employees for mileage, try our free calculator. It can help you figure out the cost.

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Mileage Rate Drops for 2016

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Editor’s Note: To view the mileage rate information for 2021, please go here.

The IRS Standard Mileage rate changes each year based on gas prices and other factors. This year, the reimbursement rate has lowered. The rate for business miles driven – i.e. employees driving their own vehicles for work purposes – has dropped 3 and a half cents. For someone who drives 100 miles in a week for work, this is a difference of three and a half dollars.

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