How to Calculate Gas Reimbursement: Mileage Logs, Rates, and Taxes

To calculate gas reimbursement, multiply your business miles by the IRS standard mileage rate, which is 72.5 cents per mile for 2026.¹ That single rate bundles fuel, depreciation, insurance, and routine maintenance into one number. If your actual costs run higher, you can instead tally every vehicle expense for the year and apply your business-use percentage. Both methods work from the same starting point: an accurate mileage log.

The Log That Every Calculation Runs On

Every reimbursement number depends on the same raw data: how far you drove, when, and why. For each trip, write down your starting and ending odometer readings, the date, and a short note on the business purpose. The IRS expects this level of detail, and most employers do too.² A note like “drove to client site in Raleigh for project walkthrough” is enough. “Business” by itself is not.

If you plan to use the actual expense method, you also need receipts for fuel, oil changes, tires, repairs, insurance premiums, registration fees, and lease payments or depreciation.² Log each trip right after it happens. Reconstructing miles from memory weeks later is how claims fall apart in an audit.

Keep your logs and receipts for at least three years after filing the return that includes those expenses. If you underreport income by more than 25 percent, the retention period extends to six years.³

Which Miles Actually Count

Driving from home to your regular workplace is commuting, and the IRS does not treat commuting as a business expense no matter how long the drive.⁴ This is the most common mistake people make when they add up reimbursable mileage. Your daily drive to the office is personal mileage, period.

A few exceptions matter. If you have a regular workplace but drive to a temporary work location for the same employer, the round trip from home qualifies as business mileage. If you have no regular workplace but usually work within your metro area, travel to a temporary site outside that area counts. And if your home office qualifies as your principal place of business, trips from home to any other work location in the same trade or business are deductible.⁴ Outside those situations, home-to-work miles stay out.

Method One: Standard Mileage Rate

The standard mileage rate is the easier of the two IRS-approved methods. Multiply your business miles by the current rate, and that’s your reimbursement. For 2026, the business rate is 72.5 cents per mile.¹ That figure already accounts for gas, depreciation, insurance, and routine maintenance.

A driver who logs 500 business miles in a month multiplies 500 by $0.725, giving $362.50 for that period. You don’t need receipts for individual fill-ups. You do still need your mileage log with dates, destinations, and purposes.

The IRS restricts who can use this method. You must own or lease the vehicle, and you cannot operate five or more cars at the same time as a fleet. You also cannot use the standard rate if you previously claimed accelerated depreciation, a Section 179 deduction, or the special depreciation allowance on the same vehicle. For a leased car, once you choose the standard mileage rate you must stick with it for the entire lease.² For a car you own, you must pick the standard rate in the first year the car is available for business use, though you can switch to actual expenses in later years.

Parking fees and tolls for business trips are deductible on top of the standard rate. They are not folded into the per-mile figure.²

Method Two: Actual Expenses

The actual expense method takes more work but can produce a larger reimbursement, especially with an expensive vehicle or high repair costs. Instead of a flat per-mile rate, you total every cost of operating the vehicle for the year and apply your business-use percentage.

Start with that percentage. Divide business miles by total miles driven. If you drove 10,000 miles total and 6,000 were for work, your business-use percentage is 60 percent. Then add up your annual vehicle expenses: gas, oil, tires, repairs, insurance, registration fees, licenses, and depreciation or lease payments.² Only operating costs count, and the expense must be ordinary and necessary for your line of work.⁵

Say those annual costs total $8,000. Multiply $8,000 by 60 percent, and your reimbursable amount is $4,800. That is more than the standard rate would yield on 6,000 miles, which comes to $4,350 at 72.5 cents. The gap widens with older or heavier vehicles that burn more fuel and need more repairs. Parking and tolls for business trips are still added separately.

The trade-off is paperwork. You need receipts for every expense category and a mileage log to support the business-use percentage. Miss either, and the calculation is vulnerable in an audit.

When the Money You Get Back Is Taxable

Reimbursement at the standard mileage rate is generally tax-free to the employee, but only if your employer’s plan meets IRS requirements for an accountable plan. An accountable plan has three rules: your expenses must have a business connection, you must substantiate them to your employer within a reasonable time, and you must return any excess reimbursement.⁴ When all three are met, the reimbursement stays off your W-2.

If the plan fails any of those tests, the IRS treats it as nonaccountable. Every dollar reimbursed gets added to your wages in Box 1 of your W-2 and is subject to income tax and payroll withholding.⁴ The same goes for any excess reimbursement you fail to return. If your employer pays $0.90 per mile when the IRS rate is $0.725, the difference is taxable income unless the employer uses a fixed-and-variable-rate (FAVR) method that justifies the higher figure.

A driver logging 15,000 business miles under a nonaccountable plan could see several thousand dollars added to taxable wages. If your employer hands you a flat monthly car allowance with no requirement to track miles or return excess, that is almost certainly a nonaccountable plan, and the full amount is taxable.

When an Employer Has to Pay You Back

Federal law does not broadly require employers to reimburse employees for gas or mileage. The Fair Labor Standards Act creates an indirect protection: if unreimbursed vehicle expenses effectively push your pay below the federal minimum wage for hours worked, the employer has violated the FLSA.⁶ The same rule applies to overtime pay. This mainly affects delivery drivers, home health aides, and other lower-wage workers whose fuel costs are significant relative to their earnings.

A small number of states require employers to reimburse necessary business expenses, including mileage, regardless of pay level. Most states do not have that requirement for private employers. If you’re unsure about your state, check with your state’s department of labor.

Other Trips With Their Own Rates

Business driving is not the only kind that qualifies for a mileage calculation. The IRS publishes separate rates for medical travel, qualifying military moves, and charitable volunteering. For 2026:

Medical purposes: 20.5 cents per mile for trips to and from doctors, hospitals, or treatment facilities.
Moving (military): 20.5 cents per mile, available only to active-duty members of the Armed Forces and certain members of the intelligence community relocating under orders.
Charitable driving: 14 cents per mile for volunteering with a qualified nonprofit.

All three rates are set for 2026.¹ The charitable rate is fixed by statute and rarely changes; the medical and moving rates adjust annually with vehicle operating costs. The math works the same way: qualifying miles multiplied by the applicable rate.

1
Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile, Up 2.5 Cents
2
Internal Revenue Service. Topic No. 510, Business Use of Car
3
Internal Revenue Service. How Long Should I Keep Records
4
Internal Revenue Service. Publication 463, Travel, Gift, and Car Expenses
5
Office of the Law Revision Counsel. 26 U.S. Code 162 – Trade or Business Expenses
6
U.S. Department of Labor. Fact Sheet 16, Deductions From Wages for Uniforms and Other Facilities Under the FLSA