Mileage Reimbursement Calculator
Your employer's rate, your miles, and what the car costs
Your result will appear here
Fill in the fields on the left and this updates as you type.
Know what this estimate is based on
- Jurisdiction
- General mathematical model
- Scope and limitations
- Educational estimate only. Confirm the assumptions, current rules, fees, and rounding that apply to your situation before making a decision.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Enter the rate your employer pays per business mile and the business miles you drive a year.
- 02
Enter all the miles the car drives in a year, business and personal, so its fixed costs can be split by the share used for work.
- 03
Enter the car's depreciation, insurance and registration for a year. AAA's 2025 averages for a new car, $4,334, $1,694 and $813, are a starting point, but your own purchase price and renewal notices are better.
- 04
Enter fuel and maintenance in cents per mile. Fuel is the price per gallon divided by your miles per gallon: $4.07 at 27 mpg is about 15 cents.
- 05
Read whether the reimbursement leaves you ahead or short, your cost per business mile, the rate that would cover it, and the table showing how the answer changes with the miles you drive for work.
Formula
Business share = business miles ÷ total miles. Cost of the business miles = (depreciation + insurance + registration) × business share + business miles × (fuel + maintenance per mile). Cost per business mile = that cost ÷ business miles. Reimbursement = employer rate × business miles. Taxable excess = (employer rate − IRS rate, never below zero) × business miles, taxed at your marginal rate plus 7.65% for Social Security and Medicare. Ahead or short = reimbursement − tax on the excess − cost of the business miles. Break-even rate = your cost per business mile if it is at or under the IRS rate; above it, (cost per mile − IRS rate × tax rate) ÷ (1 − tax rate).
Example
An employer pays 60 cents a mile for 9,000 business miles a year, on a car driven 15,000 miles in all. The car's depreciation, insurance and registration come to $6,841 a year, and fuel and maintenance to 26 cents a mile. The business miles take 60% of the fixed costs, $4,105, plus $2,340 of fuel and maintenance, for $6,448, or $0.716 a mile. The employer pays $5,400, all tax-free because 60 cents is under the 76-cent IRS rate. You come out $1,048 a year short, 11.6 cents a mile, and a rate of $0.716 would break even. At 15,000 business miles the same rate would leave you $208 ahead, because the fixed costs spread over more work miles.
Definitions
- Accountable plan
- An employer reimbursement arrangement in which you substantiate each trip and return any excess. Allowances under it, up to the federal rate, are not wages.
- Federal rate
- For car expenses, the IRS business standard mileage rate: 72.5 cents a mile through June 30, 2026 and 76 cents from July 1. It is the ceiling on a tax-free per-mile allowance.
- FAVR allowance
- A fixed and variable rate reimbursement that pays a flat amount for fixed costs plus cents per mile for operating costs. For 2026 the standard vehicle cost it can be built on is capped at $61,700.
- Fixed costs
- Costs owed whether or not the car moves: depreciation, insurance and registration. They are the part of car ownership a low per-mile rate most often fails to cover.
- Variable costs
- Costs that rise with every mile, chiefly fuel and maintenance. They are the floor any reimbursement rate should clear.
Good to know
The IRS rate is a ceiling on tax-free pay, not a measure of your costs
Most employers who reimburse driving anchor on the IRS standard mileage rate, and many employees assume that rate is what the law says the driving costs. It is neither a requirement nor a promise. It is the most an employer can pay per mile without the payment counting as wages, provided the payment is made under an accountable plan. An accountable plan has three parts: the expense has a business connection, you account for it to your employer within a reasonable time by recording the date, place and business purpose of each trip, and you return any amount paid beyond what you substantiate. Under such a plan a mileage allowance at or below the federal rate is not income. For 2026 that rate is 72.5 cents a mile through June 30 and 76 cents from July 1, under IRS Notice 2026-10 and Announcement 2026-11. IRS Publication 463 (2025 edition) explains what happens above it. The part of the allowance up to the federal rate is reported with code L in box 12 of your W-2 and is not taxed; the excess goes into box 1 as ordinary wages, with income tax, Social Security and Medicare withheld. An allowance paid without substantiation, a flat car allowance with no mileage log for example, is taxable pay in full. On the default figures the employer pays 60 cents a mile, 16 cents under the federal rate, so all $5,400 is tax-free. That tells you nothing about whether it is enough. The federal rate is built from a national study of average vehicle costs. Your own car, insurance premium and miles determine your cost, and the rest of this page is about measuring that.
Two costs per mile, and why employers and drivers talk past each other
Ask what a business mile costs and there are two honest answers. The first counts only what the extra mile uses up: fuel and wear on maintenance and tires. On the default figures that is 26 cents, about 15 cents of fuel at $4.07 a gallon and 27 miles per gallon, plus 11.04 cents of maintenance, repair and tires from AAA's 2025 edition. By that measure a 60-cent rate looks generous. The second answer counts the business share of everything the car costs, including the fixed costs that are owed whether the car moves or not: depreciation, insurance and registration. Those come to $6,841 a year on the defaults. The car drives 15,000 miles and 9,000 of them are for work, so 60% of the fixed costs, $4,105, belong to the job. Add $2,340 of fuel and maintenance and the business miles cost $6,448, or $0.716 each. By that measure the same rate leaves the driver $1,048 a year short. Employers tend to argue from the first number, because the car would have been owned anyway. Drivers argue from the second, because a car driven 9,000 miles a year for someone else's business loses value faster and costs more to insure than one used only for personal trips. The fair measure for a car the job depends on is usually the allocated one, and it is the headline here, with the marginal figure shown as the floor any rate should clear. The table adds a third insight: the allocated cost falls as work miles rise, because the fixed costs spread thinner. Holding personal driving at 6,000 miles, the cost per business mile is $0.882 at 5,000 work miles and $0.524 at 20,000, so the same rate underpays light drivers and can overpay heavy ones.
A shortfall you cannot deduct
Before 2018, an employee whose reimbursement fell short of the real cost of driving could, in principle, deduct the difference as a miscellaneous itemized deduction, subject to a floor of 2% of adjusted gross income. The Tax Cuts and Jobs Act suspended that deduction from 2018 through 2025, and the 2025 tax law made the disallowance permanent. IRS Notice 2026-10 states the consequence directly: the business standard mileage rate cannot be used to claim an itemized deduction for unreimbursed employee travel expenses. For a W-2 employee, a shortfall is therefore a pay cut in all but name. On the default figures it is $1,048 a year, and no line on the return recovers it. The exceptions are narrow and specific. Members of a reserve component of the Armed Forces, state or local government officials paid on a fee basis, and certain performing artists can deduct unreimbursed travel as an adjustment to income. Employees with impairment-related work expenses keep a deduction, and eligible educators have their own provision for certain expenses. Everyone else has two levers, and neither is the tax return. The first is the rate itself. A worked comparison like the one on this page, showing what the car costs per business mile and the rate that would cover it, $0.716 on the defaults, is a more persuasive request than a reference to the IRS figure. The second is the law where you work. Federal law does not set a reimbursement rate, but unreimbursed vehicle costs cannot be allowed to push an employee's pay below the federal minimum wage, and some states, California among them, require employers to reimburse employees' necessary business expenses, including the use of a personal car. A state labor department can say which rule applies.
FAVR and the other ways employers pay for driving
A single rate per mile is simple, and its simplicity is the problem this page keeps running into: it treats fixed and variable costs as if they were the same kind of cost. The IRS allows an alternative that separates them, the fixed and variable rate allowance, or FAVR. Under a FAVR plan the employer pays a flat periodic amount to cover fixed costs such as depreciation or lease payments, insurance, registration and taxes, plus a cents-per-mile rate for operating costs such as fuel, oil and maintenance. Both parts are built from the costs of a standard vehicle in the area where the employee drives, so they track local fuel prices and insurance rates instead of a national average. For 2026, IRS Notice 2026-10 caps the cost of that standard vehicle at $61,700. FAVR plans come with conditions, including a minimum number of business miles and requirements about the employee's own vehicle and insurance, and they take more administration than a flat rate, which is why they are most common among employers with large field sales or service teams. The structure suits exactly the driver a flat rate underpays: someone whose car is necessary for the job but whose business miles are moderate, so fixed costs dominate. On the default figures the car's fixed costs are $6,841 a year, $0.456 for every mile it is driven, on top of 26 cents of fuel and maintenance. Two other arrangements are common. A flat monthly car allowance is simple but taxable as wages unless the employee substantiates the business miles. And some employers provide a company car, which moves the fixed costs to the employer and taxes the employee on the value of personal use instead.
Frequently asked questions
Is mileage reimbursement taxable?
Not when it is paid under an accountable plan at or below the IRS rate. You record the date, place and business purpose of each trip, and your employer pays no more than the federal rate, so nothing is added to your wages. If the rate is higher, IRS Publication 463 (2025 edition) says the part above the federal rate goes into box 1 of your W-2 as wages. An allowance paid without that record-keeping is taxable pay in full.
What is the IRS mileage reimbursement rate for 2026?
72.5 cents a mile for driving from January 1 to June 30, 2026, and 76 cents a mile from July 1, 2026 (IRS Notice 2026-10 and Announcement 2026-11). It is the most an employer can pay tax-free under an accountable plan without further proof of costs, not a rate employers are required to pay.
Does 60 cents a mile cover what my car costs?
Often not, once the car's fixed costs are counted. On the default figures, a car with $6,841 a year of depreciation, insurance and registration and 26 cents a mile of fuel and maintenance, driven 15,000 miles with 9,000 for work, costs $6,448 for those business miles, or $0.716 each. At 60 cents a mile the employer pays $5,400, leaving you $1,048 short a year. It covers the fuel and maintenance easily; it does not cover the business share of the car.
Can I deduct the difference if my employer's rate is too low?
Not as a W-2 employee. The deduction for unreimbursed employee expenses has been disallowed since 2018, and the 2025 tax law made that permanent; IRS Notice 2026-10 confirms the standard rate cannot be used to claim it. The narrow exceptions are Armed Forces reservists, qualified performing artists, fee-basis state and local officials, employees with impairment-related work expenses and eligible educators.
Does my employer have to reimburse mileage at all?
Federal law does not require a particular rate, but unreimbursed vehicle costs cannot be allowed to push an employee's pay below the federal minimum wage. Some states go further: California, for example, requires employers to reimburse employees' necessary business expenses, including the use of a personal car. Check your state's labor department for the rule where you work.
What is a FAVR plan?
A fixed and variable rate allowance. Instead of one rate per mile, the employer pays a flat periodic amount for fixed costs such as depreciation, insurance and registration, plus cents per mile for fuel and maintenance, built from the costs of a standard vehicle in your area. For 2026, IRS Notice 2026-10 caps that standard vehicle's cost at $61,700. FAVR tends to suit drivers with few business miles and high fixed costs, who a flat per-mile rate underpays.
Why does my cost per mile fall the more I drive for work?
Because the fixed costs are shared across more business miles. On the default figures, with personal driving held at 6,000 miles a year, the cost per business mile is $0.882 at 5,000 business miles and $0.524 at 20,000. The same 60-cent rate leaves you $1,412 short at the lower mileage and $1,530 ahead at the higher one.