Effective January 1, 2024, the IRS standard mileage reimbursement rate for cars, vans, pickups and panel trucks is:
These rates apply equally “to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles.” You can find additional information about the 2024 IRS rates here.
Remember that California Labor Code section 2802(a) requires employers to reimburse employees “for all necessary expenditures or losses incurred…in direct consequence of the discharge of [their] duties…” This includes reimbursing employees for their work-related mileage driven in their personal vehicles, other than their normal commute to and from their first and last work locations. If the commute to and from work on any particular day will exceed the employee's normal commute, the employer must reimburse mileage for the difference between the employee's normal commute and the extended commute required on that day.
As a general rule, payment of the IRS standard rates noted above is deemed to be reasonable and sufficient reimbursement. If the employer chooses to pay rates lower than the standard IRS rates, the employer must be able to prove that the chosen rates fully compensated employees for their travel-related costs (including fuel, insurance, repairs and depreciation). Providing a fuel card is insufficient reimbursement, as fuel is only one component of reimbursable driving expenses.
Some employers provide employees with a stipend or auto allowance to cover personal vehicle costs incurred by the employee. When doing so, employers must inform employees that if the stipend exceeds their actual mileage, they must report the excess to the employer so that it can be reduced or taxed as additional income. Employers also must inform employees that if the stipend does not cover their actual mileage, they are entitled to submit a request for additional reimbursement.
Employees also must keep (and preferably, submit to the employer) records of their business mileage for tax purposes. The federal government has been cracking down on the taxation of automobile stipends/allowances, particularly when there is no documentation to prove the personal vehicle use. Employers should consult with their CPA or other tax professional about this issue.
For questions regarding reimbursement of employee expenses, or assistance with other employment law issues, contact the attorneys at LightGabler.