IRS Mileage Rate Down a Half Cent Effective January 1, 2020

The Internal Revenue Service has announced its 2020 optional standard mileage reimbursement rate for employee business use of a personal vehicle, effective January 1, 2020, decreasing from 58 to 57.5 cents.

These rates stem from annual government studies of fixed and variable automotive operating costs, including insurance, repairs, maintenance, gasoline and oil.

Under California Labor Code section 2802, employers must reimburse employees for all actual work-related expenses necessarily incurred.

According to California’s Division of Labor Standards Enforcement, using the IRS mileage reimbursement rate will satisfy an employer’s reimbursement obligation unless the employee provides evidence demonstrating otherwise. For example, if the employee can show the IRS reimbursement rate does not cover all actual and necessary business-related vehicle expenses, the employer must pay the difference.

For further assistance in complying with the new laws, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth

January 30, 2020