With the recent increase in gas prices, am I required as an employer to increase our mileage reimbursement for employees who use their personal car for business? I don’t think our budget can take that kind of a hit.
Mileage reimbursement is intended to compensate employees for gas, insurance, and wear and tear on a personal vehicle. Some companies use the current IRS rate of 55.5 cents per mile to reimburse employees for such expenses – this rate was recently increased July 1 (from 51 cents) to reflect rising gas prices. However, employers are not legally required to do so. In the likely event that actual cost per mile exceeds company policy, especially with current gas prices fluctuating weekly, an employer may either temporarily raise the reimbursement amount (with a clear end date provided) to cover the increase, or employees can check with an accountant about claiming the unreimbursed difference on their personal tax returns.
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