IRS Decreases Rate by One-Half Cent to 56

The IRS issues annually its optional standard mileage reimbursement rates for an employee’s business use of his or her vehicle.  The IRS has decreased the rate from 56.5 in 2013 to 56 cents per mile in 2014.

The government calculates the mileage rate by an annual study of the fixed and variable costs of operating an automobile.

Under California Labor Code Section 2802, employers must fully reimburse employees for all work-related expenses actually and necessarily incurred.  Many employers choose to use the IRS mileage reimbursement rate to satisfy their reimbursement obligation.

However, if the employee can show the IRS reimbursement rate does not cover all of his/her actual and reasonable business-related vehicle expenses, the employer must pay the difference.

For more details on required reimbursements to employees for business purposes, visit www.IRS.gov.