How Mileage Reimbursement Works: Rates, Rules and Records

The rate does the heavy lifting

Mileage reimbursement exists so employees and self-employed drivers do not have to track every drop of fuel and every oil change. Instead, a single per-mile or per-kilometer rate is meant to average out fuel, tires, servicing, insurance and depreciation across a typical vehicle. You multiply your business distance by that rate and you are done.

Because the rate bundles everything, you generally cannot also claim fuel receipts on top of it — that would be double-counting. The trade-off is simplicity: one number, one multiplication. If your real costs are far higher than the rate (a thirsty vehicle, expensive city fuel), some systems let you switch to an actual-cost method instead, but that means keeping every receipt.

Why IRS, HMRC and URSSAF differ

The US IRS sets one flat business rate — 67 cents per mile in 2024 — regardless of the vehicle. The UK HMRC uses a two-tier rate: 45p per mile for the first 10,000 business miles in a tax year, then 25p per mile above that, which nudges high-mileage drivers toward company cars. Both are per mile because both countries measure distance in miles.

France's URSSAF barème kilométrique, by contrast, scales the euro-per-kilometer rate by engine power (chevaux fiscaux) and by annual distance bands, so a bigger car and shorter distances earn more per kilometer. Germany applies a flat 0.30 euro per kilometer for a car. These are per kilometer because those countries measure in kilometers. The lesson: never copy a rate across borders — always use the local authority's current table.

Keep a log the tax office will accept

Whatever the rate, the reimbursement is only defensible if you can prove the distance. A compliant log records the date, start and end points, the business purpose and the miles or kilometers for each trip. Odometer readings at the start and end of the year help reconcile business against personal use.

The commute from home to your regular workplace usually does not count — only travel between work sites, to clients or to temporary locations. Apps and GPS logs are accepted in most jurisdictions, but keep the underlying data, not just a total. A tidy log is what turns a claimed number into a reimbursement the auditor signs off.

Frequently asked questions

Is mileage reimbursement taxable income?

Not if it stays at or below the official rate. Reimbursement up to the IRS, HMRC, URSSAF or local rate is tax-free because it just repays a cost. Pay above the official rate and the excess is treated as taxable income.

Can I claim fuel receipts on top of the mileage rate?

No. The per-mile or per-kilometer rate already includes fuel, so claiming receipts as well would double-count. You choose either the standard rate or the actual-cost method, not both in the same year.

Does the commute to work count?

Usually not. Ordinary commuting between home and your regular workplace is personal travel. Reimbursable mileage covers trips between work sites, to clients, or to temporary locations, not the daily drive to the office.

What rate should I use if my employer pays less?

In several countries you can claim the shortfall on your tax return. If your employer pays less than the official rate, the difference between what you got and the full rate may be deductible — check your local rules and keep the same mileage log.