California Auto Mileage Expense Reimbursement


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
2017 53.5 cents per mile
2016 54 cents per mile
2015 57.5 cents per mile
2014 56 cents per mile
2013 56.5 cents per mile
2012 55.5 cents per mile
2011 (Jul-Dec) 55.5 cents per mile
2011 (Jan-Jun) 51 cents per mile
2010 50 cents per mile
2009 55 cents per mile
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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