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While minimum wages are increasing, the IRS gave employees who drive for company business another present this holiday season: an increase in the standard mileage rate to 67 cents/mile (up from 65.5 cents/mile) effective January 1, 2024!
On December 14, 2023 the agency announced the following rates for 2024 business travel:
- 67 cents per mile driven for business use, up 1.5 cents from 2023.
- 21 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, a decrease of 1 cent from 2023.
- 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2023.
These rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles.
Why This Matters
California’s Labor Commissioner has found that the IRS mileage reimbursement rate is “reasonable” for purposes of complying with Labor Code Section 2802. LC 2802 requires employers to reimburse employees for all reasonable and necessary business expenses, such as using one’s personal vehicle for work purposes.
We encourage employers to use the standard mileage rate to pay tax-free reimbursements to employees who use their own vehicles for business, as an alternative to tracking actual costs for operating an automobile for business use.
Remember, expense reimbursements apply to salaried and hourly employees alike. For your hourly workers, note that business travel beyond their normal commute is also compensable work time. This is separate from the mileage reimbursement they receive for use of their personal vehicle for work purposes.
Next Steps
- Review your expense reimbursement policies.
- Utilizing the IRS mileage reimbursement rate for your employees is smart and easy because it covers all expenses including gas, insurance, and vehicle maintenance.
- Notify your controller, bookkeeper or whomever facilitates your expense reimbursements of this new 2024 increase.
- Review your remote worker policy—is it time for an update? Have you clearly designated and documented your 100% remote employees vs. hybrid employees?
- It’s important that you are accurately paying your employees not only for their drive time but also for any business expenses incurred on behalf of your company.
More questions? Members can call us or email us at no charge: 800.399.5331 or [email protected].