2024 IRS Mileage Rate Increase

By Kim Gusman , President and CEO

Do I have to pay my employee to run to the bank or pick up coffee for the office break room? Yes, you do!? And while you may know that California’s minimum wage increased on January 1 this year, did you know that the standard mileage rate to reimburse employees for business travel also increased?

?On?December 14, 2023,?the agency announced the following rates for 2024 business travel:

• 67 cents per mile driven for business use, up 1.5 cents from 2023.
• 21 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, a decrease of 1 cent from 2023.
• 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2023.

These rates apply to electric and hybrid-electric automobiles, gasoline, and diesel-powered vehicles.

Reimbursing Employees for Business Expenses

Labor Code Section 2802 requires employers to reimburse employees for all reasonable and necessary business expenses, such as using?a personal vehicle for work purposes. California’s Labor Commissioner considers the IRS mileage reimbursement rate to be “reasonable” for purposes of complying with LC 2802.

We encourage employers to use the standard mileage rate of 67 cents per mile to pay out tax-free reimbursements to employees who use their own vehicles for business, instead of trying to track the actual costs for operating an automobile for business use.

Remember, expense reimbursements apply to salaried and hourly employees alike. And, in addition to expense reimbursements, hourly workers need to be on the clock and paid for any business travel, above and beyond their normal commute.

To Do List

• Review your expense reimbursement policies.
• Utilizing the IRS mileage reimbursement rate for your employees is smart and easy because it covers all expenses including gas, insurance, and vehicle maintenance.
• Notify your controller, bookkeeper, or whomever facilitates your expense reimbursements of this new 2024 increase.
• Review your remote worker policy – is it time for an update? Have you clearly designated and documented your 100% remote employees vs. hybrid employees?
• It’s important that you are accurately paying your employees not only for their drive time but also for any business expenses incurred on behalf of your company

More questions??Members can call us or email us at no charge: 800.399.5331 or?[email protected].