The short answer
Mileage reimbursement is your employer paying you back, per mile, for driving your own car for work. In 2026 the IRS rate is 72.5¢ a mile for drives up to June 30 and 76¢ from July 1. Paid at or below that rate, with a log of your drives, the money isn't income: it doesn't show up on your W-2 and you pay no tax on it.
Does my employer have to reimburse me?
Federal law doesn't require it, with one exception: your employer can't leave you paying so much in car costs that your pay drops below minimum wage. Some states go further. California, for example, requires employers to cover employees' necessary work expenses, and Illinois has a similar law. Check your state's labor department and your company's policy.
Your employer also doesn't have to use the IRS rate. Many do because it's the most they can pay without it being taxed, but a company can pay less.
When it's tax-free
The IRS calls a reimbursement setup that follows its rules an accountable plan. Under one:
- The drives have to be for work. Your commute from home to your regular workplace isn't.
- You hand in a record of each drive (date, miles, places and purpose) within a reasonable time. The IRS treats 60 days as reasonable.
- Anything you're paid in advance and don't use, you give back.
Follow those, get paid at or below the IRS rate, and it's all tax-free. If your employer pays more than the IRS rate, the extra counts as wages.
Car allowances are different
A flat monthly car allowance, paid whether or not you drive, isn't a reimbursement. It's taxed like salary. Some companies use a fixed-and-variable rate (FAVR) plan instead, a fixed amount for the car plus a rate per mile, which can be tax-free if it follows the IRS rules for those plans.
Can I deduct miles my employer doesn't pay for?
Generally, no. Employees lost the deduction for unreimbursed work expenses in 2018, and in 2025 the change was made permanent. A few groups can still claim it, such as Armed Forces reservists, some performing artists and some state and local officials. If you're self-employed, the rules are different: your miles are a business deduction. See the 2026 IRS mileage rate.
Working out what you're owed
Multiply your work miles by your company's rate, using the rate for the date of each drive. With the IRS rate, 300 miles in June and 300 in July come to $217.50 + $228 = $445.50. The mileage calculator does it for you, with your company's own rate if it has one.
What to hand in
Most companies want a mileage log with each drive's date, start and end, miles and business purpose, often once a month. A mileage log template works, and so does an app that records your drives as you go. What the IRS wants in a mileage log lists every field.
Sources
- IRS Publication 463, chapter 6: How to Report (reimbursements and accountable plans)
- IRS: Standard mileage rates
This guide explains the IRS rules in plain English. It isn't tax advice; for your own situation, ask a tax professional.
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