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

To calculate mileage reimbursement, multiply the number of qualifying miles you drove by the IRS standard mileage rate that applies to the purpose of the trip. For business driving in 2026, that rate is 72.5 cents per mile, so a 200-mile business trip works out to $145 (200 × $0.725).¹ The arithmetic is easy. The parts that trip people up are which miles qualify, what your log has to say, and whether the money that lands in your account is taxable.

The 2026 IRS Rates

The rate you use depends on why you were driving. For miles driven on or after January 1, 2026:

The business rate is what an employer will normally use for reimbursement, and it’s also the rate self-employed filers apply on Schedule C. The IRS recalculates the business and medical rates each year based on a study of actual vehicle operating costs, which is why they move; the 14-cent charitable rate is written into the tax code and only Congress can change it.²

Which Miles You Can Actually Count

The multiplier is only useful if you’re counting the right miles. The IRS draws a hard line between commuting and business travel, and that line controls most of the analysis.

Your daily drive between home and your regular workplace is commuting, and it does not qualify no matter how far you live from the office. Business miles are things like driving between two worksites during the day, going from your office to a client, or traveling to a temporary work location.³

The Temporary Work Location Exception

If you have a regular workplace and you drive from home to a temporary work location in the same line of work, that drive counts, even though it starts at home. The assignment has to be realistically expected to last one year or less, and it has to actually end within that window. Once an assignment crosses the one-year mark, or once you know it will, the location becomes a regular workplace and the commuting rule takes over again.³

Personal Detours

If you stop for a personal errand between two work locations, you can still claim the miles it would have taken to drive directly between them. You can’t claim the extra distance the detour added.³ That means the number you record isn’t necessarily what your odometer shows for that leg; it’s the direct-route distance.

Standard Rate or Actual Expenses

The IRS lets you calculate vehicle costs two ways. Employer reimbursement programs almost always use the standard rate because it’s simpler for both sides, but the choice matters if you’re self-employed or you’re checking whether an offer is fair.

Under the standard mileage rate method, you multiply qualifying miles by the applicable rate. A 150-mile business trip in 2026 comes to $108.75. You don’t need to keep gas receipts or track oil changes; the rate is built to cover all of those costs in one per-mile figure.¹

Under the actual expense method, you total what you spend on the vehicle in a year (gas, oil, tires, insurance, registration, repairs, lease payments, depreciation) and multiply by the percentage of miles driven for business. Drove 20,000 miles total with 12,000 for business? Sixty percent of your actual costs are deductible.³

You can’t use the standard rate if you operate five or more vehicles at the same time, if you’ve claimed accelerated depreciation or a Section 179 deduction on the vehicle, or if you used actual expenses after 1997 for a leased vehicle.⁴ For an owned vehicle, you also have to pick the standard rate in the first year you use the car for business if you want the option of switching later; leased vehicles are locked into whichever method you first choose for the entire lease.³

What Your Mileage Log Needs

A calculation is only as good as the log behind it. The IRS expects specific details for each business trip:

The date you drove.
The destination (city, town, or area).
The business purpose (meeting a vendor, visiting a job site, delivering materials).
The miles driven, plus your total miles for the year.

Publication 463 spells out these requirements and recommends odometer readings to establish distances accurately. Timing counts too. The IRS wants records created at or near the time of the trip. A weekly log covering the past week is fine; reconstructing six months of mileage from memory in April carries far less weight.³

Keep the logs for at least three years after filing the return that includes the reimbursement or deduction. If there’s any chance income was underreported by more than 25%, keep them six years. For a vehicle you’re still depreciating, hold records until the limitations period runs out for the year you dispose of it.⁵

Whether the Money Is Taxed

The dollars you calculate may or may not survive to your bank account intact, depending on whether your employer runs an accountable plan.

An accountable plan has to meet three conditions: the expenses must have a business connection, you must adequately substantiate them (with a proper log), and you must return any reimbursement that exceeds substantiated expenses within a reasonable time.⁶ Meet all three and the reimbursement is excluded from your gross income, stays off your W-2 as wages, and isn’t hit with payroll taxes.⁷

Miss any of the three, as with a flat car allowance that requires no mileage tracking, and the whole payment is treated as taxable wages, subject to withholding and employment taxes.⁷

There’s a related trap when an employer pays above the IRS rate. If you’re reimbursed at 80 cents a mile in 2026, the 7.5-cent excess is taxable income unless you return it. On 10,000 miles, that’s $750 added to your W-2 as wages. The portion at or below 72.5 cents stays tax-free.⁷ The IRS also expects prompt substantiation: 60 days from when the expense is incurred under the fixed-date safe harbor, or 120 days after a quarterly employer statement.⁶ Blow those windows and otherwise tax-free reimbursements can flip to taxable.

If You’re Self-Employed or Not Reimbursed

Self-employed filers don’t get reimbursement from an employer; they deduct vehicle expenses directly on Schedule C.⁴ The math is the same 72.5 cents times qualifying business miles, and the same log requirements apply. A freelancer driving 15,000 business miles in 2026 has a $10,875 deduction that reduces both income tax and self-employment tax.

Regular W-2 employees whose employers don’t reimburse them are largely out of luck. The Tax Cuts and Jobs Act suspended the deduction for unreimbursed employee business expenses starting in 2018, and the One Big Beautiful Bill Act made that suspension permanent, so for 2026 and beyond most employees can’t deduct mileage their employer doesn’t cover. A few categories can still take the deduction as an adjustment to income rather than an itemized deduction: Armed Forces reservists, qualified performing artists, fee-basis state and local government officials, and eligible educators (subject to a dollar cap).⁸

Is Your Employer Required to Reimburse You

No federal law requires employers to reimburse mileage. The Fair Labor Standards Act does bar an employer from letting unreimbursed driving expenses push an employee’s effective pay below minimum wage, but that’s a wage-floor protection, not a reimbursement mandate. A handful of states, including California, Illinois, and Massachusetts, require employers to cover necessary business expenses, and in those states the IRS standard rate is commonly used as the benchmark, though employers can use a different reasonable method to approximate actual costs. Everywhere else, reimbursement depends on your employer’s policy and your agreement with them.

1
Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents per Mile, Up 2.5 Cents
2
Office of the Law Revision Counsel. 26 U.S. Code 170 – Charitable, Etc., Contributions and Gifts
3
Internal Revenue Service. Publication 463 (2025), Travel, Gift, and Car Expenses
4
Internal Revenue Service. Topic No. 510, Business Use of Car
5
Internal Revenue Service. How Long Should I Keep Records
6
eCFR. 26 CFR 1.62-2 – Reimbursements and Other Expense Allowance Arrangements
7
Internal Revenue Service. Part I Section 62(c) – Certain Arrangements Not Treated as Reimbursement Arrangements
8
Internal Revenue Service. 2026 Standard Mileage Rates