2021 IRS Mileage Reimbursement Rates

Each year, the IRS sets optional standard mileage rates as a simple way to calculate the deductible costs of operating an automobile for business, charitable, or medical purposes. You also have the option of calculating the actual costs of using your vehicle rather than using the standard mileage rates.

Effective January 1st, the 2021 IRS standard mileage rates for business-related use of a car (or van, pickup or panel truck) are:

  • 56 cents per mile driven for business use (down from 2020)
  • 16 cents per mile driven for medical or moving purposes for qualified active duty members of the Armed Forces (down from 2020)
  • 14 cents per mile driven in service of charitable organizations (unchanged from 2020)

As an employer, you may optionally reimburse your employees using this rate or a lower rate so as long as the employee provides an accounting of the miles driven using their personal vehicles for business purposes. Miles driven from their home to work are not allowable. The reimbursement can be paid non-tax if the rate per mile used is less than the IRS rate. However, your reimbursement will limit your employees' ability to expense the use of their vehicles on their personal returns.

Note: Under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, except members of the Armed Forces on active duty moving under orders to a permanent change of station.

Disclaimer: This information is provided as a self-help tool and does not constitute legal or financial advice. Laws, regulations and lending products are changing daily and decisions as to whether or how to use this information and/or what actions to take are solely those of the employer. The providers of this information disclaim any and all responsibility and liability for its accuracy, completeness or fitness for your particular business purposes.