Before you issue those employee expense reimbursement checks for January, don’t forget that the IRS standard mileage reimbursement rate was reduced to 57.5 cents per mile for 2020—down from 58 cents per mile in 2019. The standard IRS mileage rate is usually used as a simpler alternative to calculating the actual reimbursable expenses attributable to an employee’s use of their personal vehicle for work, and such rate is generally presumed to be sufficient to cover the actual expense. Such vehicle-related reimbursable expenses covered in this rate include: car payments, gas/oil, license/registration fees, insurance, maintenance, depreciation, etc. The standard mileage reimbursement rate, however, does not compensate employees for other ancillary auto-related expenses, such as parking or tolls, and those expenses should be reimbursed as separate items if required for the work-related use of the vehicle.
Accordingly, if your employees are required to use their personal vehicles in the performance of their duties (excluding their normal commute to and from work), they should be reimbursed for the expense of such use. Of course, if the employer provides a Company vehicle and gas for the employee to use for business, there is no obligation to reimburse the employee.