What’s New In 2021: Reimbursing Employee Personal Vehicle Use « Law Offices of Timothy Bowles | Top Employment Law Firm in Los Angeles

What’s New In 2021: Reimbursing Employee Personal Vehicle Use

IRS Mileage Rate Decreasing 1.5 Cents

Effective January 1, 2021

The Internal Revenue Service (IRS) has announced its 2021 optional standard mileage reimbursement rate for employee business use of a personal vehicle, effective January 1, 2021, down from 57.5 cents to 56 cents/mile.

These annual adjustments stem from government survey 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 the state’s  Division of Labor Standards Enforcement, using the IRS mileage reimbursement rate will normally satisfy an employer’s reimbursement obligation. However, if  the employee can show the IRS reimbursement rate does not cover all of his/her actual and necessary business-related vehicle expenses, the employer must pay the difference.

For more information, please contact Tim BowlesCindy Bamforth or Helena Kobrin.

Cindy Bamforth

December 29, 2020

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