Automobile expenses will be reimbursed at the current Internal Revenue Service (IRS) standard mileage rate for that activity type (defined below) when a personal automobile is used. Reimbursement based upon actual expenses is not allowed. Supporting documentation must include the business purpose for the activity and actual mileage.
Mileage reimbursements received for business, certain relocation, medical, and charitable transportation are not taxable when reimbursed at the current IRS applicable mileage rate. The following information is provided as a general guideline regarding the IRS treatment of mileage reimbursements. Policies restricting types and amounts of mileage reimbursements may be set at the department or school level. However, it is the responsibility of the department or school to document, communicate, and enforce any restrictions they impose. To the extent that a department or school chooses to reimburse mileage above the standard rate allowable under IRS rules for that activity, such reimbursements will be treated as taxable income to the recipient.
Business mileage will be reimbursed as a nontaxable expense up to the IRS business mileage rate.
Business transportation addressed here refers to transportation expenses incurred locally. For transportation expenses incurred while traveling, please refer to the Use of Personal Automobile section under Travel and Business Expenses.
Business miles include:
- Getting from one business location to another.
- Going to a business meeting away from your regular workplace. Regular workplace means your principal place of business. This is the location that you regularly report to and from which you regularly do your job. Generally, the regular place of work is the campus at which the employee performs most of his/her duties.
- Getting from your home to a temporary workplace when you have one or more regular places of work. Temporary workplace means any place that is not a regular work location where you are assigned to work for less than one year.
Business mileage does not include the cost of commuting between your regular workplace and home regardless of the day of the week or other circumstances. Reimbursement of commuting expenses are taxable and generally not an allowable reimbursable expense.
Limits on Employee Business Mileage Reimbursement
When an employee is required to use a personal vehicle for transportation to multiple business locations in a single day, the employee may be reimbursed without tax consequence for local business mileage in excess of the employee’s standard daily commute from home to his/her regular place of business.
Nontaxable relocation mileage reimbursements up to the IRS standard relocation mileage rate related to moving are allowed only for the following:
- Mileage incurred to physically move all household objects, including plants and pets, from the old home to the new home for full-time employees.
- Mileage incurred to physically move all household members from the old home to the new home for full-time employees.
Taxable mileage reimbursements related to relocation include the following:
- All mileage incurred for house hunting visits.
- All mileage incurred for moving household goods and household members for part-time employees, stipend recipients, students, and non-employees.
- Any amount over the standard relocation mileage rate. (See table below.)
- For information regarding other types of relocation expenses, please refer to the Relocation Expense Guide.
Nontaxable medical mileage reimbursements up to the IRS standard medical mileage rate related to medical care are allowed only for the following:
- Mileage incurred traveling primarily for and necessary to medical care.
- Mileage incurred to accompany a patient receiving medical care if the person’s presence is an essential element in the patient’s medical care. This includes accompanying minors and patients unable to transport or care for themselves.
Medical mileage will be reimbursed as a nontaxable expense up to the IRS standard medical mileage rate.
Charitable miles are miles incurred as a result of performing a volunteer service for the university. Mileage is considered incurred only if there is no significant element of personal pleasure, recreation, or vacation. Charitable mileage will be reimbursed as a nontaxable expense up to the IRS standard charitable mileage rate.
Procedures for Reimbursing Local Mileage
Local mileage should be reimbursed on a Check Request. Local mileage does not include travel mileage. Travel mileage includes mileage incurred to travel between your home and your business destination that is outside of a fifty (50) mile radius of your regular work location. Travel mileage should be reimbursed on a Travel Report. See the Use of Personal Automobile section under Travel and Business Expenses.
All local business mileage reimbursements will require substantiation on the number of miles incurred and the business purpose for incurring the miles. Examples of acceptable substantiation include a printout from Mapquest or similar online travel map service of the route(s) or a log of mileage incurred. A brief description of the valid business purpose for the trip(s) must also be included in the backup or on the Check Request.