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IRS Mileage Rate Increases

by Erika Frank | | June 13, 2022

To account for the high price of gasoline, the Internal Revenue Service is increasing the mileage reimbursement rate for business travel from $.585 to $.625 per mile.  This increase takes effect on July 1, and will extend through the end of December.  Historically, the IRS updates the mileage rate once a year, so this mid-year adjustment is a surprise.  Even though the IRS adjustment is in response to the high cost of gasoline, the rate also reflects additional costs, such as vehicle depreciation and insurance.  California employers must reimburse employees for all “reasonable” and “necessary” expenses incurred during the performance of the employee’s job.  This includes reimbursing the cost of driving a personal vehicle for work-related purposes (that is, outside of an employee’s normal commute).   Although not required, employers should consider adopting the IRS mileage reimbursement rate.  Doing so creates a rebuttable presumption that the employee was fully compensated for vehicle-related expenses.

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