Managing a mileage reimbursement policy means understanding the minimum obligations under both federal and state laws, as well as how to establish an efficient rate that fairly reimburses employees without increasing their compensation and incurring payroll and income taxes for both the employer and employee. However, this approach can result in overpaying employees for mileage, which could incur additional taxes. Some companies prefer to set a monthly flat rate for reimbursement when employees are regularly using their own vehicles for company purposes. 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?
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