How Much Should I Pay for Mileage Reimbursement?

The answer is not as clear-cut as you would think.

As a premier fleet management company, we tell you the reality of what mileage reimbursement SHOULD cost.

Annually, the IRS determines a recommended rate for mileage reimbursement for business use of a personal vehicle. The rate determined is a guideline based on the fixed and variable costs of operating a vehicle. Without additional investigation of actual costs for your employees, most companies default to using this recommended rate for their mileage reimbursement.

What isn’t taken into consideration is that most of the time, an employee does not spend the same cost per mile as what is suggested by the IRS. Based on the employee’s vehicle type, mileage driven, fuel prices, and regional cost of living differences, the actual cost for the employee to drive could be significantly higher or lower. Coupling this with wear and tear and upkeep on their personal vehicle, mileage reimbursement is not always the best answer.

Oftentimes, after doing an analysis on mileage reimbursement, it is determined that it is not the best method for the company. Ewald Fleet Solutions has found that reimbursement expenses can be reduced by up to 25%! Companies can provide vehicles at lower acquisition and financing costs, which will drive down the overall cost per mile on a vehicle. A company-provided vehicle will also better control safety, image, and expenses for the company while giving an employee the added benefit of a company vehicle.

Before determining your mileage reimbursement rate for your employees, we recommend that you compare all methods for business travel at your company. You may be surprised that another option can save your company time and money over reimbursement. If you would like assistance in doing this analysis, contact Ewald Fleet Solutions today!