Mileage reimbursement is typically set at a per-mile rate – usually below $1 per mile. These expenses can include fuel costs, maintenance and vehicle depreciation. Mileage reimbursement is when employers offer employees reimbursement for expenses associated with driving on behalf of the business. This guide explains the basics of mileage reimbursement and how to devise a policy that reimburses your employees fairly and efficiently. There are both legal requirements and business considerations to keep in mind when determining whether you need a mileage reimbursement policy and what it should look like. If you don’t have a fleet of company vehicles and employees are driving their own vehicles on your business’s behalf – making deliveries, inspecting workplaces and gathering supplies – what are your obligations regarding fuel costs, maintenance and vehicle depreciation? This article is for small business owners who want to establish a reimbursement policy for mileage and vehicle costs employees incur when driving for work-related purposes.The current IRS mileage reimbursement rate is $0.625, but you should use a fixed and variable rate (FAVR) program to determine a fair and efficient reimbursement rate by geography.Mileage reimbursement is federally required when failure to reimburse would decrease an employee’s net wages below minimum wage otherwise, businesses could be open to lawsuits and financial penalties.Employers are not federally required to reimburse employees for mileage and vehicle costs, but state laws may apply in some jurisdictions.
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