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Quick Summary
California employees must be reimbursed for their employment related expenses, including mileage reimbursement. Although the IRS rate is not required to be used, it often is.
Law Review
IRS Mileage Reimbursement Rates
| Calendar Year |
IRS Standard Auto Mileage Reimbursement Rate |
| 2008 (Jul-Dec) |
58.5 cents per mile |
| 2008 (Jan-Jun) |
50.5 cents per mile |
| 2007 |
48.5 cents per mile |
| 2006 |
44.5 cents per mile |
| 2005 (Sep-Dec) |
48.5 cents per mile |
| 2005 (Jan-Aug) |
40.5 cents per mile |
| 2004 |
37.5 cents per mile |
| 2003 |
36.0 cents per mile |
| 2002 |
36.5 cents per mile |
| 2001 |
34.5 cents per mile |
| 2000 |
32.5 cents per mile |
What if the Employee is Reimbursed at a Rate Less Than the IRS Rate?
An employer is not required to reimburse their California employees at the rate set by the IRS. A lower rate can be used. However, regardless of the rate set by the employer, California law requires that the employee be reimbursed for all of his or her employment-related expenses.
Note: The California mileage rate is not set in stone like the IRS mileage rate. Employers are required to reimburse California employees for their employment expenses. Typically, employers conveniently use the IRS rate. But if the IRS rate does not keep up with rising gas prices, especially in high cost areas like California, then an employer is required to provide an auto mileage reimbursement at a rate higher than the IRS rate.
Example: the truck used for company business gets 10 miles to the gallon. Gas prices in California are $4 per gallon. If the employee drives 100 miles they have used 10 gallons, or $40 in gas. The IRS mileage rate is 50.5 cents per mile, or $50.5. But California requires reimbursement of expenses - not reimbursement of gas! Once the employee figures in oil, wear and tear, insurance, etc., their actual expenses may be significantly higher.
What if the Employee is Reimbursed at a Rate More Than the IRS Rate?
An employer is not required to reimburse their California employee at the rate set by the IRS. A higher rate can be used. However, the amount in excess of the IRS rate may be considered taxable wages.
More Information is Available with a Premium Subscription
Text of California's statute requiring the reimbursement of employee expenses
Explanation of what happens if an employee's actual vehicle expenses exceed the IRS rate
How long does an employee have to submit a reimbursement claim?
An extensive tax section that discusses:
What California mileage expenses can be deducted
What California mileage expenses cannot be deducted
How an employee deducts unreimbursed mileage expenses
Monthly car allowances
What happens when a previously deducted expense is later reimbursed
When a business needs to report reimbursed expenses on an employee's W-2
Need proof of the IRS rate? We have a copy of the IRS revenue procedure setting the mileage reimbursement rate.
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