current travel allowance rates

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• Per Diem Lookup

Travel resources

Per diem look-up, 1 choose a location.

Error, The Per Diem API is not responding. Please try again later.

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Rates for Alaska, Hawaii, U.S. Territories and Possessions are set by the Department of Defense .

Rates for foreign countries are set by the State Department .

2 Choose a date

Rates are available between 10/1/2021 and 09/30/2024.

The End Date of your trip can not occur before the Start Date.

Traveler reimbursement is based on the location of the work activities and not the accommodations, unless lodging is not available at the work activity, then the agency may authorize the rate where lodging is obtained.

Unless otherwise specified, the per diem locality is defined as "all locations within, or entirely surrounded by, the corporate limits of the key city, including independent entities located within those boundaries."

Per diem localities with county definitions shall include "all locations within, or entirely surrounded by, the corporate limits of the key city as well as the boundaries of the listed counties, including independent entities located within the boundaries of the key city and the listed counties (unless otherwise listed separately)."

When a military installation or Government - related facility(whether or not specifically named) is located partially within more than one city or county boundary, the applicable per diem rate for the entire installation or facility is the higher of the rates which apply to the cities and / or counties, even though part(s) of such activities may be located outside the defined per diem locality.

City Pair airfares

Visit City Pair Program to learn about its competitive, federally-negotiated airline rates for 7,500+ domestic and international cities, equating to over 13,000 city pairs.

• Search for contract fares

Note: All fares are listed one-way and are valid in either direction. Disclaimer - taxes and fees may apply to the final price

Taxes and fees may apply to the final price

Your agency’s authorized travel management system will show the final price, excluding baggage fees. Commercial baggage fees can be found on the Airline information page.

Domestic fares include all existing Federal, State, and local taxes, as well as airport maintenance fees and other administrative fees. Domestic fares do not include fees such as passenger facility charges, segment fees, and passenger security service fees.

International

International fares do not include taxes and fees, but include fuel surcharge fees.

Note for international fares: City codes, such as Washington (WAS), are used for international routes.

Federal travelers should use their authorized travel management system when booking airfare.

• E-Gov Travel Service for civilian agencies.
• Defense Travel System for the Department of Defense.

If these services are not fully implemented, travelers should use these links:

• Travel Management Center for civilian agencies.
• Defense Travel Management Office for the Department of Defense.

GSA lodging programs

Shop for lodging at competitive, often below-market hotel rates negotiated by the federal government.

FedRooms provides federal travelers on official business with FTR compliant hotel rooms for transient and extended stays (up to 29 days). The program uses FEMA and ADA-compliant rooms with flexible booking terms at or below per diem rates. Federal employees should make reservations, including FedRooms reservations, via their travel management service.

Visit GSALodging for more details on FedRooms and for additional programs offering meeting space, long term lodging, and emergency lodging.

Privately owned vehicle (POV) mileage reimbursement rates

GSA has adjusted all POV mileage reimbursement rates effective January 1, 2024.

* Airplane nautical miles (NMs) should be converted into statute miles (SMs) or regular miles when submitting a voucher using the formula (1 NM equals 1.15077945 SMs).

For calculating the mileage difference between airports, please visit the U.S. Department of Transportation's Inter-Airport Distance website.

Plan a trip

Research and prepare for government travel.

Per diem, meals & incidental expenses (M&IE) Passenger transportation (airfare rates, POV rates, etc.) Lodging Conferences/meetings Travel charge card State tax exemption

Services for government agencies

Programs providing commercial travel services.

Travel Category Schedule (Schedule L) E-Gov Travel Service (ETS) Emergency Lodging Services (ELS) Employee relocation

Travel reporting

Federal Travel Regulation Table of contents Chapter 300—General Chapter 301—Temporary Duty (TDY) Travel allowances Chapter 302 - Relocation allowances

Travel Allowances, Mileage and Per Diem Rates

Expenses for travel on official business by University employees are reimbursed at the following rates set by State legislation , the Internal Revenue Service (IRS), the US General Services Administration (GSA), US Department of State and the Department of Defense as applicable.

Transportation by Vehicle

University travelers are encouraged to use a state-owned or leased vehicle through Fleet Services . If a state-owned or leased vehicle is not available, travelers should use the least expensive method of ground transportation to meet their business needs.

When a personal vehicle must be used, the allowable IRS mileage rate, effective Jan. 1, 2024 is:

Mileage reimbursements up to 350 miles (round-trip) are reimbursed at the full IRS rate. For trips which exceed 350 miles, mileage above the first 350 miles is reimbursed at fifty percent (50%) of the full rate. Please refer to 1501.4 – Procedure on Ground Transportation Expenses Including Mileage Rates for more information.

Lodging and Meals (Per Diem)

Per diem is the allowable amount for room and meals based on the destination and dates of travel as detailed below. See 1501.5 – Procedure on Per Diem Rates and 1501.6 – Procedure on Lodging Accommodations for more information.

Reimbursement for lodging may be made only in the amount documented by an itemized receipt of actual lodging expenses from a commercial lodging establishment.

Effective for travel beginning March 1, 2023, the University will now utilize the lodging per diem rates set by the US General Services Administration (GSA), US Department of State and Department of Defense as applicable. Travelers should secure lodging no more than 50% higher than the lodging rates set for their destination and dates of travel. Lodging rates only apply to the nightly room rate charged by the establishment and do not include taxes and fees. Lodging obtained in excess of these rates will require additional information.

For more information on lodging rates, excess lodging and third-party lodging information see 1501.6 – Procedure on Lodging Accommodations .

University travelers are only eligible for meal per diem when they make an overnight trip. Partial day per diem is possible when the partial day is the day of departure or return for a trip, but it must be in conjunction with an overnight trip taken. Reimbursement of meals outside of overnight travel is not permitted.

Tax and tips for meals are included in the per diem rate. The cost of meals included in other related activities (registration fees, conference costs, hotel registration, etc.) may not be duplicated in reimbursement requests.

Effective for travel beginning March 1, 2023, the University will now utilize the per rates set by the US General Services Administration (GSA), US Department of State and Department of Defense as applicable.

For employees, all rates are loaded in Concur and will populate based on the dates and location of travel and the meals selected by the traveler for reimbursement.

For all other travelers:

• Look up the rate based on the destination and dates of travel utilizing the links above.
• First and last day of travel are calculated at 75% of the day’s total rate, regardless of the traveler’s time of departure or time of return.
• If a meal was provided to the traveler and not paid for out of pocket, that meal must be deducted from the full day’s per diem rate. A breakdown of meal rates are included in the links above.
• If meals are provided to the traveler on the first or last day of travel, the 75% calculation is taken first and then the full meal rate is deducted. For example, if dinner is provided on the first day of travel for a location with a $65 per diem rate the calculation will be $65 x 75% = $48.75 – $26 Dinner = $22.75.
• Per diem reimbursement for a given day of travel will never be less than the incidental rate for that day, regardless of the calculations above.

For more information on per diem rates, see 1501.5 – Procedure on Per Diem Rates .

• Travel and Payment Card Services

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IRS updates business travel per-diem rates

• Individual Income Taxation

The IRS issued its annual update Friday of special per-diem rates for substantiating ordinary and necessary business expenses incurred while traveling away from home ( Notice 2021-52 ).

The new rates are in effect from Oct. 1, 2021, to Sept. 30, 2022. Specifically, they are the special per-diem rates, including the transportation industry meal and incidental expenses rates; the rate for the incidental-expenses-only deduction; and the rates and list of high-cost localities for purposes of the high-low substantiation method.

The updated rates are effective for per-diem allowances paid to any employee on or after Oct. 1, 2021, for travel away from home on or after that date, and supersede the rates in Notice 2020-71, which provided the rates for Oct. 1, 2020, through Sept. 30, 2021.

Rev. Proc. 2019-48 provided general rules for using a federal per-diem rate to substantiate the amount of ordinary and necessary expenses for lodging, meals, and incidental costs paid or incurred for business-related travel away from home.

High-low substantiation method

For purposes of the high-low substantiation method, the per-diem rates are $296 for travel to any high-cost locality and $202 for travel to any other locality within the continental United States (CONUS), both slightly higher than last year.

The amount of these rates that is treated as paid for meals for purposes of Sec. 274(n) is $74 for travel to a high-cost locality and $64 for travel to any other locality within CONUS, both also slightly higher than last year.

The notice contains a list of the localities that are high-cost localities (localities that have a federal per-diem rate of $249 or more, $4 higher than last year) for all or part of the calendar year.

Incidental expenses

Since 2012, incidental expenses have included only fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. The per-diem rate for the incidental-expenses-only deduction remains unchanged at $5 per day for any locality of travel.

Transportation industry

The special meals and incidental expenses rates for taxpayers in the transportation industry are $69 for any locality of travel within CONUS and $74 for any locality of travel outside CONUS, both $3 more than last year.

— Paul Bonner ( [email protected] ) is a JofA senior editor.

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ATO Reasonable Travel Allowances

‘Reasonable’ allowances received in accordance with ATO’s reasonable travel allowances schedules are not required to be declared as income, and can be excluded from the expense substantiation requirements.

Per diem rate schedules of amounts considered reasonable are set out in Tax Determinations published by the Tax Office annually.

Tax Ruling TR 2004/6 describes the substantiation exception for expenses which are in line with the prescribed reasonable allowance amounts.

2021, 2022, 2023 and 2024 rates and for prior years are set out below.

The annual determinations set out updated ATO reasonable allowances for each financial year for:

• overtime meal expenses – for food and drink when working overtime
• domestic travel expenses – for accommodation, food and drink, and incidentals when travelling away from home overnight for work
• overseas travel expenses – for food and drink, and incidentals when travelling overseas for work

On this page:

2017- 18-Addendum

More information

Substantiation rules

Substantiation in practice

Alternative: Business travel expense claims

Distinguishing Travelling, Living Away and Accounting for Fringe Benefits

See also: Super for long-distance drivers – ATO

Allowances for 2023-24

The full document in PDF format: 2023-24 Determination TD TD 2023/3 (pdf).

The 2023-24 reasonable amount for overtime meal expenses is $35.65.

Reasonable amounts given for meals for employee truck drivers (domestic travel) are as follows:

• breakfast $28.75
• lunch $32.80
• dinner $56.60

For full details including domestic and overseas allowances in accordance with salary levels, refer to the full determination document:

2023-24 Domestic Travel

Table 1：Salary $138,790 or less

Table 2: Salary $138,791 to $247,020

Table 3: Salary $247,021 or more

Table 4: High cost country centres accommodation expenses

Table 5: Tier 2 country centres

Table 5a: Employee truck driver’s meals (food and drink)

2023-24 Overseas Travel

Table 6: Salary $138,790 or less

Table 7: Salary $138,791 to $247,020

Table 8: Salary $247,021 or more

Table 9: Table of countries

Table 1：Reasonable amounts for domestic travel expenses – employee’s annual salary $138,790 or less

Table 2: Reasonable amounts for domestic travel expenses – employee’s annual salary $138,791 to $247,020

Table 3: Reasonable amounts for domestic travel expenses – employee’s annual salary $247,021 or more

Table 4: Reasonable amounts for domestic travel expenses – high-cost country centres accommodation expenses

Table 5a: Reasonable amounts for domestic travel expenses – employee truck driver’s meals (food and drink)

Table 6: Reasonable amounts for overseas travel expenses – employee’s annual salary $138,790 or less

Table 7: Reasonable amounts for overseas travel expenses – employee’s annual salary $138,791 to $247,020

Table 8: Reasonable amounts for overseas travel expenses – employee’s annual salary $247,021 or more

Allowances for 2022-23

The full document in PDF format: 2022-23 Determination TD 2022/10 (pdf).

The 2022-23 reasonable amount for overtime meal expenses is $33.25.

Reasonable amounts given for meals for employee truck drivers are as follows:

• breakfast $26.80
• lunch $30.60
• dinner $52.75

2022-23 Domestic Travel

Table 1: Salary $133,450 and below

Table 2: Salary $133,451 to $237,520

Table 3: Salary $237,521 and above

2022-23 Overseas Travel

Table 6: Salary $133,450 and below

Table 7: Salary – $133,451 to $237,520

Table 8: Salary – $237,521 and above

Table 1: Reasonable amounts for domestic travel expenses – employee’s annual salary $133,450 and below

Table 2: Reasonable amounts for domestic travel expenses – employee’s annual salary $133,451 to $237,520

Table 3: Reasonable amounts for domestic travel expenses – employee’s annual salary $237,521 and above

Table 4: Reasonable amounts for domestic travel expenses – high-cost country centres accommodation expenses

Table 5a: Reasonable amounts for domestic travel expenses – employee truck driver’s meals (food and drink)

Table 6: Reasonable amounts for overseas travel expenses – employee’s annual salary $133,450 and below

Table 7: Reasonable amounts for overseas travel expenses – employee’s annual salary $133,451 to $237,520

Table 8: Reasonable amounts for overseas travel expenses – employee’s annual salary $237,521 and above

Allowances for 2021-22

The full document in PDF format: 2021-22 Determination TD 2021/6 (pdf).

The document displayed with links to each sections is set out below.

For the 2021-22 income year the reasonable amount for overtime meal expenses is $32.50

2021-22 Domestic Travel

Table 1: Salary $129,250 and below

Table 2: Salary $129,251 to $230,050

Table 3: Salary $230,051 and above

2021-22 Overseas Travel

Table 6: Salary $129,250 and below

Table 7: Salary – $129,251 to $230,050

Table 8: Salary – $230,051 and above

2021-22 Domestic Table 1: Employee’s annual salary – $129,250 and below

2021-22 Domestic Table 2: Employee’s annual salary – $129,251 to $230,050

2021-22 Domestic Table 3: Employee’s annual salary – $230,051 and above

2021-22 Domestic Table 4: High cost country centres – accommodation expenses

2021-22 Domestic Table 5: Tier 2 country centres

2021-22 Domestic Table 5a: Employee truck driver’s meals (food and drink)

2021-22 Overseas Table 6: Employee’s annual salary – $129,250 and below

2021-22 Overseas Table 7: Employee’s annual salary – $129,251 to $230,050

2021-22 Overseas Table 8: Employee’s annual salary – $230,051 and above

2021-22 Overseas Table 9: Table of countries

Allowances for 2020-21

Download full document in PDF format: 2020-21 Determination TD 2020/5 (pdf).

The document displayed with links to each section is set out below.

For the 2020-21 income year the reasonable amount for overtime meal expenses is $31.95 .

2020-21 Domestic Travel

Table 1: Salary $126,970 and below

Table 2: Salary $126,971 to $225,980

Table 3: Salary $225,981 and above

2020-21 Overseas Travel

Table 6: Salary $126,970 and below

Table 7: Salary – $126,971 to $225,980

Table 8: Salary – $225,981 and above

2020-21 Domestic Travel 2020-21 Domestic Table 1: Employee’s annual salary – $126,970 and below

2020-21 Domestic Table 2: Employee’s annual salary – $126,971 to $225,980

2020-21 Domestic Table 3: Employee’s annual salary – $225,981 and above

2020-21 Domestic Table 4: High cost country centres – accommodation expenses

2020-21 Domestic Table 5: Tier 2 country centres

2020-21 Domestic Table 5a: Employee truck driver’s meals (food and drink)

2020-21 Overseas Travel 2020-21 Overseas Table 6: Employee’s annual salary – $126,970 and below

2020-21 Overseas Table 7: Employee’s annual salary – $126,971 to $225,980

2020-21 Overseas Table 8: Employee’s annual salary – $225,981 and above

2020-21 Overseas Table 9: Table of countries

Allowances for 2019-20

The determination in sections:

Domestic Travel

Table 1: Employee’s annual salary – $124,480 and below

Table 2: Employee’s annual salary – $124,481 to $221,550

Table 3: Employee’s annual salary – $221,551 and above

Table 4: High cost country centres – accommodation expenses

Table 5a: Employee truck driver’s meals (food and drink)

Overseas Travel

Table 6: Employee’s annual salary – $124,480 and below

Table 7: Employee’s annual salary – $124,481 to $221,550

Table 8: Employee’s annual salary – $221,551 and above

For the 2019-20 income year the reasonable amount for overtime meal expenses is $31.25.

The reasonable travel and overtime meal allowance expense amounts commencing 1 July 2019 for the 2019-20 income year are contained in Tax Determination TD 2019/11 (issued 3 July 2019).

Download the PDF or view online here .

Domestic Travel Table 1: Employee’s annual salary – $124,480 and below

Domestic Travel Table 2: Employee’s annual salary – $124,481 to $221,550

Domestic Travel Table 3: Employee’s annual salary – $221,551 and above

Domestic Travel Table 4: High cost country centres – accommodation expenses

Domestic Travel Table 5: Tier 2 country centres

Domestic Travel Table 5a: Employee truck driver’s meals (food and drink)

Overseas Travel Table 6: Employee’s annual salary – $124,480 and below

Overseas Travel Table 7: Employee’s annual salary – $124,481 to $221,550

Overseas Travel Table 8: Employee’s annual salary – $221,551 and above

Overseas Travel Table 9: Table of countries

Substantiation and Compliance

Taxation Ruling TR 2004/6 explains the the way in which the expenses can be claimed within the substantiation rules, including the requirement to obtain written evidence and exemptions to that requirement.

Allowances which are ‘reasonable’ , i.e. comply with the Reasonable Allowance determination amounts and with TR 2004/6 are not required to be declared as income and are excluded from the expense substantiation requirements.

These substantiation rules only apply to employees. Non-employees must fully substantiate their travel expense claims. Expenses for non-working accompanying spouses are excluded.

Key points :

To be claimable as a tax deduction, and to be excluded from the expense substantiation requirements, travel and overtime meal allowances must:

• be for work-related purposes; and
• be supported by payments connected to the relevant expense
• for travel allowance expenses, the employee must sleep away from home
• if the amount claimed is more than the ‘reasonable’ amount set out in the Tax Determination, then the whole claim must be substantiated
• employees can be required to verify the facts relied upon to claim a tax deduction and/or the exclusion from the substantiation requirements
• an allowance conforming to the guidelines doesn’t need to be declared as income or claimed in the employee’s tax return, unless it has been itemised on the statement of earnings. Amounts of genuine reasonable allowances provided to employees(excludng overseas accommodation) are not required to be subjected to tax withholdings or itemised on an employee’s statement of earnings.
• claims which don’t match the amount of the allowance need to be declared.

The Tax Office has issued guidance on their position.

[11 August 2021] Taxation Ruling TR 2021/4 reviews the tax treatment of accommodation and food and drink expenses, and provides 14 examples which distinguish non-deductible living expenses from deductible travelling on work expenses. FBT implications for the ‘otherwise deductible’ rule and travel and LAFHA allowances are also considered.

[11 August 2021] Practical Compliance Guideline PCG 2021/3 (which finalises draft PCG 2021/D1 ) provides the ATO’s compliance approach to determining if allowances or benefits provided to an employee are travelling on work, or living at a location.

For FBT purposes an employee is deemed to be travelling on work if they are away for no more than 21 consecutive days, and fewer than 90 days in the same work location in a FBT year.

See also: Travel between home and work and LAFHA Living Away From Home

The issue of annual determination TD 2017/19 for the 2017-18 year marked a tightening of the Tax Office’s interpretation of the necessary conditions for the relief of allowances from the substantiation rules, which would otherwise require full documentary evidence (e.g. receipts) and travel records. (900-50(1))

For a full discussion of the issues, this article from Bantacs is recommended: Reasonable Allowance Concessions Effectively Abolished By The ATO .

Prior to 2017-18

In summary: Prior to 2017-18 the Tax Office rulings stated the general position that provided a travel allowance was ‘reasonable’ (i.e. followed the ATO-determined amounts) then substantiation with written evidence was not required. “In appropriate cases”, however employees may have been required to show how their claim was calculated and that the expense was actually incurred.

What changed

The relevant wording was changed in the 2017-18 determination to now require that more specific additional evidence be available if requested. This additional evidence is not prescribed in the tax rules, but represents a higher administrative standard being applied by the Tax Office.

The required evidence includes being able to show:

• you spent the money on work duties (e.g. away from home overnight for work)
• how the claim was worked out (e.g. diary record)
• you spent the money yourself (e.g. credit card statement, banking records)
• you were not reimbursed (e.g. letter from employer)

Other requirements highlighted by the Bantacs article include:

• a representative sample of receipts may be required to show that a reasonable allowance (or part of it) has actually been spent (TD 2017/19 para 20)
• hostels or caravan parks are not considered eligible for the accommodation component of a reasonable allowance because they are not the right kind of “commercial establishment”, examples of which are hotels, motels and serviced apartments (para 14)
• reasonable amounts for meals can only be for meals within the specific hours of travel (not days), and can only be for breakfast, lunch or dinner (para 15), and therefore could exclude, for example, meals taken during a period of night work.

Tip : The reasonable amount for incidentals still applies in full to each day of travel covered by the allowance, without the need to apportion for any part day travel on the first and last day. (para 16).

Alternative: business travel expense claims

With the burden of proof on ‘reasonable allowance’ claims potentially quite high, an alternative is to opt for a travel expense claim made out under the general substantiation rules for employees, or under the general rules for deductibility for businesses.

The kind of business travel expenses referred to here could include:

Airfares Accommodation Meals Car hire Incidentals (e.g. taxi fares)

The Tax Office has an article describing how to meet the requirements for claiming travel expenses as a tax deduction. See: Claiming a tax deduction for business travel expenses

Travel diary

A travel diary is required by sole traders and partners for overnight expenses and recommended for everyone else (including companies and trusts).

It is important to exclude any private portion of travelling expense which is non-deductible, or if paid on behalf of an employee gives rise to an FBT liability.

For example the expenses of a non-business associate (e.g. spouse), the cost of private activities such as sight-seeing, and accommodation and associated expenses for the non-business portion of a trip.

Airfares to and from a business travel destination would not need to be apportioned if the private element of the trip such as sightseeing was only incidental to the main purpose and time spent.

This is an example of a travel diary for Rebecca who owns a business as a sole trader landscape gardener. (courtesy of ATO Tax Time Fact Sheet )

Allowances for 2018-19

For the 2018-19 income year the reasonable amount for overtime meal allowance expenses is $30.60 .

The meal-by-meal amounts for employee long distance truck drivers are $24.70, $28.15 and $48.60 per day for breakfast, lunch and dinner respectively.

This determination includes ATO reasonable allowances for

(a) overtime meal expenses – for food and drink when working overtime (b) domestic travel expenses – for accommodation, food and drink, and incidentals when travelling away from home overnight for work (particular reasonable amounts are given for employee truck drivers, office holders covered by the Remuneration Tribunal and Federal Members of Parliament) (c) overseas travel expenses – for food and drink, and incidentals when travelling overseas for work

Allowances for 2017-18

An addendum was issued modifying paragraphs 23 to 30 of determination TD 2017/19 setting out the new reasonable amounts, and consolidated into TD 2017/19 as linked above. For reference purposes, the first-released version of TD 2017/19 issued 3 July 2017 is linked here .

2017-18 Addendum: ATO reinstates the meal-by-meal approach for truck drivers’ travel expense claims

On 27 October 2017 the ATO announced the reinstatement of the meal-by-meal approach for truck drivers who claim domestic travel expenses for meals. The following new reasonable amounts have now been included in an updated version of the current ruling (see on page 7)：

For the 2017-18 income year the reasonable amount for overtime meal allowance expenses is $30.05 .

This determination contains ATO reasonable allowances for:

• overtime meals
• domestic travel
• employee truck drivers
• overseas travel
• $24.25 for breakfast
• $27.65 for lunch
• $47.70 for dinner

The amount for each meal is separate and can’t be combined into a single daily amount or moved from one meal to another.

See: ATO media release

Allowances for 2016-17

For the 2016-17 income year the reasonable amount for overtime meal allowance expenses is $29.40 .

Allowances for 2015-16

Download the PDF or view online here . For the 2015-16 income year the reasonable amount for overtime meal allowance expenses is $ 28.80 .

Allowances for 2014-15

Allowances for 2013-14

The reasonable travel and overtime meal allowance expense amounts for the 2013-14 income year are contained in Tax Determination TD 2013/16 . For the 2013-14 income year the reasonable amount for overtime meal allowance expenses is $ 27.70 .

Allowances for 2012-13

The reasonable travel and overtime meal allowance expense amounts for the 2012-13 income year are contained in Tax Determination TD 2012/17 . For the 2012-13 income year the reasonable amount for overtime meal allowance expenses is $27.10

Allowances for 2011-12

The reasonable travel and overtime meal allowance expense amounts for the 2011-12 income year are contained in Tax Determination TD 2011/017 . For the 2011-12 income year the reasonable amount for overtime meal allowance expenses is $26.45

This page was last modified 2023-06-28

Employee travel allowance rates - Current

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Rates effective on and from 1 July 2023

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Comprehensive Guide to Mileage Reimbursement Rules for Employees and Employers

Mileage reimbursement is a form of compensation businesses provide their employees for using personal vehicles at work. As the name suggests, reimbursements are based on distance traveled and can be completely tax-free if calculated using the standard mileage rate provided by the Internal Revenue Service. The rate is updated annually to reflect the ever-changing gas prices, insurance, depreciation, and other car maintenance costs. 

In addition to mileage rates, the IRS specifies what is considered business-related travel and can be reimbursed without paying income tax. For example, daily commuting from home to the regular workplace is not counted as business-related travel. 

While mileage reimbursements aren’t mandatory on a federal level, they’re considered a standard procedure, especially in professions that require frequent driving. They’re a crucial mechanism for employers to keep their staff happy and fairly compensated for their business travels. 

Understanding Mileage Reimbursement Rules

Employee mileage reimbursement is the process of compensating employees for work-related driving using their personal vehicles. This type of reimbursement is not mandatory in most states, but in many industries, it’s considered a standard procedure that helps maintain employee satisfaction through fair compensation. The only states that require businesses to reimburse employees for using their vehicles for work are California, Illinois, and Massachusetts. 

For reimbursements to be tax-free, companies need to use standard mileage rates provided by the IRS. In 2024, it means that companies can issue tax-free reimbursements at the maximum rate of 67 cents per mile. 

Any vehicle reimbursement higher than that is considered taxable income. Still, companies sometimes may choose to offer higher reimbursement rates based on factors like:

• Local fuel and maintenance costs
• Difficult driving conditions
• Industry standards

Therefore, a well-crafted mileage reimbursement policy guarantees accurate travel payment for employees and significantly contributes to attracting and retaining staff.

It’s also worth mentioning that to keep employees happy, some companies choose to implement different compensation methods like a car allowance. In that case, employees have more freedom around using the benefit since it’s not dependent on mileage. 

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Automatic, accurate mileage reports.

What Are Employee Reimbursement Methods ?

Mileage-based reimbursements are quite common. They usually result in fair compensation, and they’re quite easy to implement, especially with the help of a mileage-tracking app like MileIQ. 

However, other methods may be more suitable for companies and employees, depending on the specific situation. 

For example, the actual expenses method is considered more accurate and can result in higher compensation, but it requires much more detailed recordkeeping and accounting for all vehicle-related expenses. 

Then, there’s the fixed and variable rate (FAVR) method, which combines the mileage-based approach and the actual expense method. 

A slightly less popular method is providing a car allowance. It’s a fixed benefit added to salary, which can be spent entirely according to the employee’s preferences. Remember, that some employers might have usage guidelines that need to be followed.

IRS Mileage Reimbursement Rates

Before we talk about the current rates, it’s necessary to point out that the standard rates set by the IRS only specify the maximum rate at which businesses can reimburse employees for mileage tax-free. In other words, reimbursement payments under or at the IRS limit do not count toward an employee's taxable income.

Because there’s no federal law enforcing mileage reimbursements, companies in most states can set their own rates that can be lower or higher than the standard. Any amount exceeding the standard rate has to be considered a taxable income. 

For 2024, the standard mileage rate for business use is set at 67 cents per mile, which means it increased by 1.5 cents compared to the previous year. As always, the IRS determined the rate through an annual study of the fixed and variable costs of operating a vehicle, taking into account factors like:

• depreciation
• maintenance
• fuel prices

Mileage Allowance

Another method of mileage reimbursement is mileage allowance. This is a fixed amount given to employees each month to cover their driving expenses. It’s probably the easiest method of vehicle reimbursement for employers. 

However, it is fully taxable, so it may not be the most optimal method from a fiscal standpoint. On top of that, it’s also the most inaccurate form of compensation. Depending on their vehicle use every month, employees usually will be reimbursed either too generously or not sufficiently enough. 

Still, it’s often appreciated by employees as it gives them complete freedom in terms of how exactly they spend their allowance. 

FAVR (Fixed and Variable Rate)

The Fixed and Variable Rate (FAVR) is a unique reimbursement method that combines a flat monthly allowance with a variable rate per mile driven. This method is sanctioned by the IRS, allowing companies to reimburse employees tax-free for business driving using their personal vehicles.

FAVR takes into account both the fixed costs (depreciation, insurance, license fees) and variable costs (fuel, maintenance, repairs) of operating a vehicle. One of the main reasons for its introduction was to allow companies to build their own reimbursement systems that reflect specific costs and conditions in different geographic areas. 

Legal Requirements for Mileage Reimbursement

Only three states require companies to reimburse employees for their use of personal vehicles: Illinois, California, and Massachusetts. Everywhere else, mileage reimbursements are optional, so businesses can create their own policies as long as they align with the IRS regulations. 

However, there are general rules for employee reimbursement in the Fair Labor Standards Act. For example, if an employee’s business expenses (such as gas) effectively reduce their income below the federal minimum wage, they must be reimbursed to match the difference. 

You can find more reimbursement regulations in the Tax Cuts and Jobs Act. Since its introduction in 2017, employees can’t claim unreimbursed expenses as tax deductions.

Calculating Mileage Reimbursements

The formula for calculating mileage reimbursement is quite simple. 

But before you go through the numbers, you should make sure that you track and categorize all your business miles properly throughout the year. There’s quite a wide range of tools that can help you track and prepare documentation for the IRS.

While it’s still possible to keep records in a notebook or a simple spreadsheet, it’s much more convenient to use a mobile tracking app that helps you with all the steps of the process, from mileage tracking to calculating and preparing documents for your tax return. 

But if you prefer the traditional way, here’s the formula for calculating mileage reimbursement:

business miles driven * mileage rate = reimbursement

While calculating, remember that not all companies use the IRS standard mileage rates. It’s possible that your employer has a different rate, but if the reimbursements are still based on mileage, the formula remains the same. 

Documenting Mileage for Reimbursement

In addition to mileage, the IRS requires a few other details to allow tax-free reimbursements. Records about each trip have to include:

• purpose of the trip
• starting and ending point
• odometer readings

Any missing information may lead to an IRS audit and costly penalties, so that’s another reason to keep your records accurate. Be sure to hold on to any relevant documentation for at least three years — which is typically how far back the IRS checks records during an audit.

Best Practices for Employers

The most important part for employers is choosing the right reimbursement method that will be easy to manage and fair for employees. The basic mileage-based method can work out just fine, but there are situations in which it may be insufficient. For example, if a profession requires not only driving but also renting vehicles, it may be better to use the FAVR method or car allowance. 

Communication is another crucial aspect. The mileage reimbursement policy has to be perfectly clear to ensure that employees understand what to expect when it comes to mileage reimbursement.

It’s also important to leave room for discussion and potential optimization. Just like standard mileage rates are updated yearly, employees may ask for the policy update if the rate doesn’t reflect growing prices of gas and other vehicle-related expenses. 

Automating Mileage Tracking

Mileage tracking software and apps, like MileIQ, make employee reimbursements much more manageable by automating the most tedious parts of the process.. 

Trips can be tracked with just a few clicks, and reports for the IRS can be easily generated at the end of the year. And on top of that, you don’t need to worry about misplacing any crucial documents.

Common Questions and Concerns

There’s always a risk of an IRS audit if there’s any missing documentation or miscalculation, so businesses need to pay close attention to all the records backing tax-free reimbursements. They may review the mileage log and sometimes even ask for supporting documentation proving the purpose of a trip. 

That’s why, as an employee, you should make sure to record each business-related trip, including all the relevant information about purpose and date. That way, you’ll have the necessary proof for the IRS and your employer.

Still tracking miles by hand?

Check out more mileage guides.

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IRS increases mileage rate for remainder of 2022

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IR-2022-124, June 9, 2022

WASHINGTON — The Internal Revenue Service today announced an increase in the optional standard mileage rate for the final 6 months of 2022. Taxpayers may use the optional standard mileage rates to calculate the deductible costs of operating an automobile for business and certain other purposes.

For the final 6 months of 2022, the standard mileage rate for business travel will be 62.5 cents per mile, up 4 cents from the rate effective at the start of the year. The new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents for the remainder of 2022, up 4 cents from the rate effective at the start of 2022. These new rates become effective July 1, 2022. The IRS provided legal guidance on the new rates in Announcement 2022-13 PDF , issued today.

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2022. The IRS normally updates the mileage rates once a year in the fall for the next calendar year. For travel from January 1 through June 30, 2022, taxpayers should use the rates set forth in Notice 2022-03 PDF .

"The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices," said IRS Commissioner Chuck Rettig. "We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses and others who use this rate.” 

While fuel costs are a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs. 

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage. 

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

The 14 cents per mile rate for charitable organizations remains unchanged as it is set by statute.

Midyear increases in the optional mileage rates are rare, the last time the IRS made such an increase was in 2011.

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Table of Contents

IRS mileage rates for 2023

Irs issues mileage rates for 2024, irs standard mileage rate for business, calculating standard mileage vs. actual expenses for business, other irs mileage rate types, how to claim tax deductions using irs mileage rates, tracking your mileage.

Certain taxpayers can deduct mileage from vehicle use related to business, charity, medical or moving purposes

To take the deduction, taxpayers must meet use requirements and may have to itemize on their returns if claiming certain types of mileage.

For 2023, the IRS' standard mileage rates are $0.655 per mile for business, $0.22 per mile for medical or moving, and $0.14 per mile for charity.

If you drive for your business or plan to rack up some miles while volunteering this year, you might be eligible to deduct some of that mileage on your tax return.

To qualify for this deduction, the miles must have been driven for qualifying business, medical, moving or charity purposes, and you may have to itemize on your return to claim the tax break. Rates are valid for electric, PHEV, gas, and diesel-fueled cars.

For the 2023 tax years (taxes filed in 2024), the IRS standard mileage rates are:

65.5 cents per mile for business.

14 cents per mile for charity.

22 cents per mile for medical and moving purposes.

On Dec. 14, 2023, the agency announced the forthcoming tax year's optional mileage rates. Business rates will increase by 1.5 cents, charity miles will remain the same at 14 cents per mile, and medical and moving miles will decrease by 1 cent.

67 cents per mile for business.

21 cents per mile for medical/moving.

If you’re self-employed or work as a contractor, you might be able to deduct the cost of the use of your car for business purposes. Your tax deduction depends on how you use your vehicle. Commuting to work is generally not deductible mileage, but you may be able to deduct mileage for business-related trips, such as those made to clients, meetings or temporary workplaces [0] Internal Revenue Service . Publication 463: Travel, Gift, and Car Expenses . View all sources .

You can also choose whether to deduct standard mileage using the rates above versus actual expense (e.g., repairs, depreciation, gas, and so forth), but you can't deduct both. Expenses for tolls or parking fees related to business use, however, are separately deductible regardless of which method you use [0] Internal Revenue Service . Topic no. 510, Business Use of Car . Accessed Jan 17, 2024. View all sources .

There are two options for calculating the business deduction for the use of your vehicle.

1. Standard mileage deduction

This is the most straightforward way of calculating your driving expense: simply multiply the number of business miles by the IRS mileage rate. However, you’ll need to keep a record of your business-related mileage.

To use the standard IRS mileage deduction method, you must own or lease the car. But the rules for business mileage deductions can be complex, especially if you use lots of vehicles for business. The IRS website has more details [0] Internal Revenue Service . Topic No. 510, Business Use of Car . Accessed Jul 18, 2023. View all sources .

2. Actual expenses

If you don’t want to track your mileage, you could track and deduct the actual expenses you incur while using your vehicle for business purposes. These expenses may include:

Depreciation.

Lease payments.

Registration fees.

Gas and oil.

» MORE: See what other tax breaks you can take if you’re self-employed

IRS standard mileage rate for volunteering and charitable activities

If you used your car to help a charity or to go somewhere to volunteer, the mileage can be deductible. You can deduct parking fees and tolls as well.

If you don’t want to deduct your mileage, you can deduct your unreimbursed out-of-pocket expenses, such as gas and oil. However, the expenses have to relate directly to the use of your car in giving services to a charitable organization. Also, you can't deduct repair and maintenance costs, depreciation, registration fees, tires or insurance [0] Internal Revenue Service . About Publication 526, Charitable Contributions . View all sources .

» MORE: See what else counts as a charitable deduction

IRS standard mileage rate for moving

Only active-duty members of the military can deduct mileage related to moving. The move has to be related to a permanent change of station [0] Internal Revenue Service . Instructions for Form 3903 . View all sources .

IRS standard mileage rate for medical

If you used your car for medical reasons, you may be able to deduct the mileage. "Medical reasons" include:

Driving to the doctor, hospital or other medical facility.

Driving a child or other person who needs medical care to receive medical care.

Driving to see a mentally ill dependent if the visits are recommended as part of treatment.

You can deduct parking fees and tolls as well.

If you don’t want to deduct your mileage, you can deduct your unreimbursed out-of-pocket expenses, such as gas and oil. However, the expenses have to relate directly to the use of your car for medical purposes. Also, you can't deduct repair and maintenance costs, depreciation or insurance.

Mileage isn’t the only transportation cost you might be able to deduct as a medical expense. IRS Publication 502 has the details. Here’s a big caveat: In general, you can deduct qualified, unreimbursed medical expenses that are more than 7.5% of your adjusted gross income .

» MORE: See what else you might be able to deduct as a medical expense

If you're deducting mileage for moving, medical or charity purposes, you'll need to itemize on your tax return in order to claim the tax deduction. Itemizing means you’ll need to set aside extra time when preparing your returns to fill tax forms Form 1040 and Schedule A , as well as supporting schedules that feed into those forms.

If you're self-employed, you’ll claim your mileage deduction as a business expense on Schedule C . If you file your taxes online , the software will ask about your mileage during the interview process and calculate the deduction.

This is important because if you’re audited, you may need to substantiate your deduction by showing a log of the miles you drove.

There are lots of ways to keep track of your mileage. Something as simple as keeping a pen and paper in the glove compartment can suffice, but a quick trip to Google or your phone's app store will reveal a variety of tools that can streamline things.

On a similar note...

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• Personal tax

Rates and allowances: travel — mileage and fuel allowances

Rates and allowances for travel including mileage and fuel allowances.

Travel — mileage and fuel rates and allowances

The attached document is classified by HMRC as guidance and contains information about rates and allowances for travel, including mileage and fuel allowances.

Rates for fuel charges have been updated for 2024 to 2025.

Rates for fuel charges have been updated for 2023 to 2024.

Rates for fuel charges have been updated for 2022 to 2023.

Rates for fuel charges have been updated for 2021 to 2022.

Information has been updated to include tax years 2018 to 2019 and 2019 to 2020, also removed some older details.

Rates, allowances and duties have been updated for the tax year 2017 to 2018.

First published.

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