Mileage Reimbursement Calculator

Methodology: Mileage Reimbursement Calculator

Fact-checked May 23, 2026 →

What this tool computes

The IRS-rate reimbursement amount for a given number of business miles in a given year, plus an optional California §2802 actual-cost comparison that surfaces the under-reimbursement risk a California employer takes on by paying at the IRS rate alone.

Two arithmetic operations sit underneath:

  • irsAmount = miles × IRS business rate for the year
  • actualAmount = miles × per-mile actual cost (California mode only)

The value is in the modeled data — the right IRS rate for the right year, the right AAA "Your Driving Costs" weighted-average for the right year, and the right legal framing of when above-rate payments become wage income — not in the arithmetic.

Where the IRS rates come from

The IRS publishes the optional standard mileage rate annually as an IRS Notice, typically in late December for the following calendar year. The rates the calculator uses:

YearBusiness rateDepreciation portionIRS NoticeAnnounced
202467.0¢/mile30.0¢/mileNotice 2024-08Dec 14, 2023
202570.0¢/mile33.0¢/mileNotice 2025-5Dec 19, 2024
202672.5¢/mile35.0¢/mileNotice 2026-10Dec 29, 2025

The 2026 figure of 72.5¢ comes from IR-2025-128 ("Beginning Jan. 1, 2026, the standard mileage rate for the business use of a car (including vans, pickups or panel trucks) will be 72.5 cents per mile, up 2.5 cents from 2025"). The depreciation portion is 35¢/mile per Notice 2026-10 §4.04.

The rate is set under IRC §162 (ordinary and necessary business expense), implemented by the umbrella revenue procedure (Rev. Proc. 2019-46). It reflects a fixed-and-variable-cost study covering depreciation, maintenance, repair, tires, fuel, oil, insurance, and license/registration fees. The medical and moving rates (20.5¢ in 2026) reflect only the variable-cost subset; the charitable rate (14¢) is fixed by statute at 26 USC §170(i) and has not changed since 1998.

The calculator surfaces the business rate only — medical, moving, and charitable rates are taxpayer-side deductions, not employer reimbursement scenarios.

Why year of travel is required

A reimbursement paid in 2026 for miles driven in 2025 uses the 2025 rate (70¢), not the 2026 rate (72.5¢). IRS Notices are effective for travel "on or after January 1, [year]" through December 31 of that year — the rate follows the mile, not the payment.

The single most common bug pattern for mileage calculators is assuming "current year." The calculator surfaces year as a required input so the user can't elide it. Multi-year travel periods (e.g., December 2025 + January 2026) require splitting the miles by year — v1 handles single-year only.

The California §2802 actual-cost comparison

California Labor Code §2802(a) requires employers to indemnify employees for "all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties." Per Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal.4th 554 (Cal. 2007), §2802 is satisfied by any of three methods: actual-expense, mileage (e.g., IRS rate × miles), or lump-sum. The IRS rate is "presumptively reasonable but rebuttable" — an employee can prove actual costs exceeded the reimbursement and recover the gap.

When California mode is on, the calculator surfaces an actual-cost estimate using the AAA "Your Driving Costs" weighted-average per-mile figure as the default benchmark. AAA's methodology uses a 5-year ownership horizon, 15,000 miles per year, across 9 vehicle categories and 45 models, with cost categories matching the IRS Notice's "fixed and variable costs" framing (depreciation, fuel, maintenance/repair/tires, insurance, license/registration/taxes, finance charges).

YearAAA annual costPer-mile (÷ 15,000)
2024$12,29782.0¢/mi
2025$11,57777.18¢/mi
2026not yet published — calculator falls back to 2025 figure

The AAA per-mile figure has consistently exceeded the IRS business rate. For 1,000 business miles in 2025, the IRS-rate reimbursement is $700; the AAA-estimated actual cost is $771.80 — a $71.80 §2802 exposure per 1,000 miles for a California employer paying at the IRS rate.

The actual-cost field is user-overridable. An EV driver with operating costs of 30¢/mi is over-compensated by the 72.5¢ IRS rate; a pickup driver in a high-insurance state may run 90¢+. The default is the AAA average; the right number for a specific employee depends on the vehicle and the geography.

Tax treatment — accountable plans

Reimbursement at or below the IRS rate under an accountable plan satisfying 26 CFR §1.62-2 is excluded from W-2 wages and not subject to payroll tax. Three elements must be met:

  1. Business connection — reimbursement is for an expense deductible under §162.
  2. Substantiation — employee documents amount, time, place, and business purpose within a reasonable time (per 26 CFR §1.274-5, generally interpreted as 60 days).
  3. Return of excess — employee returns any reimbursement exceeding the substantiated amount within a reasonable time (generally 120 days).

Reimbursement above the IRS rate is taxable W-2 income for the excess unless the employee substantiates the higher actual costs separately. The Tax Cuts and Jobs Act suspended the W-2 employee's miscellaneous itemized deduction under IRC §67(g); the One Big Beautiful Bill Act (2025) made that suspension permanent effective January 1, 2026. W-2 employees can no longer claim unreimbursed business expenses on their federal return at all (narrow educator-expense carve-out preserved).

What this tool does NOT compute

  • Tax liability on the reimbursement. The "above-IRS-rate excess is wages" framing is surfaced as a note; the calculator does not compute the dollar tax cost. That's the employee's payroll math.
  • FAVR plans. Fixed-and-Variable-Rate plans under Rev. Proc. 2010-51 are a more complex employer-side structure for high-mileage drivers (25,000+ business miles/year). The 2026 maximum standard automobile cost under a FAVR plan is $61,700. Out of scope for v1.
  • Medical / moving / charitable mileage. Taxpayer-side tax-return deductions, not employer reimbursement. The IRS publishes all four rates in the same Notice but they're conceptually distinct.
  • Multi-year travel splits. Miles spanning December 2025 and January 2026 need to be split manually — v1 handles single-year only.
  • Commuting carve-outs. Per IRC §262 and Commissioner v. Flowers, 326 U.S. 465 (1946), commuting between home and a regular workplace is not deductible / reimbursable. Travel between two work locations on the same day is. The calculator assumes the user has already filtered their log to business miles only — it cannot detect commuting from inputs alone.
  • Per-diem / lodging / M&IE. Different IRS framework (Rev. Proc. 2019-48).
  • Multi-state work-location apportionment. California §2802 follows the employee's work location, not the employer's HQ. The calculator's CA toggle assumes the user has already made the jurisdictional determination.

Sources

Frequently asked questions

Why is year of travel required instead of defaulting to the current year?

The single most common bug pattern for mileage calculators is assuming "current year." The IRS Notice for each year is effective for travel "on or after January 1, [year]" — a reimbursement paid in 2026 for miles driven in 2025 uses the 2025 rate (70¢), not 2026 (72.5¢). Surfacing year as a required input prevents the silent wrong-year math that produces under-reimbursement for back-pay scenarios and amended-return filings.

Why is California mode an explicit toggle, not derived from a state selector?

The jurisdictional question is "where does the employee perform the work," not "where is the employer based" or "where is the employee a resident." A California-based employer paying a Texas-remote worker doesn't trigger §2802; a Texas-based employer paying a California-remote worker does. A state dropdown would either ask the wrong question or require three separate fields (employer state, employee state, work-location state). The toggle lets the user assert the §2802 determination directly. Other state-based reimbursement statutes (Illinois 820 ILCS 115/9.5, Montana §39-2-701, etc.) have similar mechanics but lack the Gattuso "presumptively reasonable but rebuttable" doctrine that makes the IRS-vs-actual comparison the dominant compliance question.

Why does California mode default to the AAA weighted-average per-mile figure?

AAA's "Your Driving Costs" report is the most-cited Tier-2 source for actual vehicle operating costs in litigation and practitioner guidance. The 2025 weighted-average ($11,577/year ÷ 15,000 miles = 77.18¢/mile) covers depreciation, fuel, maintenance/repair/tires, insurance, license/registration/taxes, and finance charges — the same conceptual basket the IRS Notice uses for its rate-setting. The per-mile figure is overridable: an EV driver runs much lower (≈ 15–20¢ for operating cost), a pickup driver runs much higher (≈ 99¢ total). The default surfaces the population average; the override lets a specific employee's situation come through.

Why does the 2026 California mode fall back to the 2025 AAA figure?

AAA publishes the "Your Driving Costs" report annually in September. The 2026 report typically becomes available in September 2026 — until then, the calculator falls back to the most recent published year (2025's 77.18¢/mile) and discloses the fall-back inline ("AAA 2026 not yet published"). The fallback is conservative: the 2025 figure was a $719 decline from 2024, and longer-run AAA averages have been trending up with vehicle prices and insurance premiums, so the 2025 figure is more likely to under-state than over-state 2026 actuals.

Why isn't the medical / moving / charitable rate surfaced?

Those are taxpayer-side tax-return deductions, not employer reimbursement scenarios. The IRS publishes all four rates in the same Notice but they're conceptually distinct: medical (20.5¢ in 2026) is a Schedule A deduction subject to the 7.5%-of-AGI floor; moving (20.5¢) is narrowly available to active-duty military and intelligence-community personnel only per OBBBA §70113(b); charitable (14¢) is the donation mileage deduction fixed by 26 USC §170(i) since 1998. None of these are employer-reimbursement math. The calculator is scoped to the business-rate reimbursement scenario for clarity.

Why doesn't this calculator surface FAVR plan math?

Fixed-and-Variable-Rate plans under Rev. Proc. 2010-51 are an IRS-blessed alternative to flat mileage reimbursement for high-mileage drivers (typically 25,000+ business miles/year — outside sales, pharmaceutical reps, field service). FAVR has a two-component structure: a fixed monthly stipend covering depreciation/insurance/registration in the rep's geography, plus a variable per-mile rate for fuel and maintenance. The 2026 maximum standard automobile cost under FAVR is $61,700. The math requires substantially more inputs (employer's geography, vehicle category, fixed/variable split formula) and would clutter the worker-facing flat-rate scenario this calculator addresses. A future FAVR-specific calculator would be a separate tool.

About Clockspot

Clockspot is online time clock software for small businesses — the simplest way to track employee time, with GPS location tracking, PTO accruals, job costing, and overtime calculation. Used in all 50 states since 2007.

Clockspot tracks employee work location and required hours by jurisdiction — the records §2802 audits and IRS substantiation rules both demand. Mileage logs, geofenced clock-in, and per-employee work-state assignment live in one timesheet. See how Clockspot tracks work location and mileage records.