Business mileage: calculation and rules · United States

Practical answers about travel, receipts and expenses for your business.

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Your questions, in practice · United States

What is a mileage allowance?

Mileage reimbursement pays for business use of a personal vehicle. It is calculated from business distance and the applicable rate or scale. It covers vehicle costs; it is not a travel bonus or repayment for private journeys.

How do you calculate mileage reimbursement in 2026?

Record business distance, vehicle and journey date. Apply the selected scheme’s rate or formula for that period, then deduct advances already paid. Where the rate is per mile, convert kilometres before applying it.

What are the 2026 mileage rates?

The IRS rate is $0.725 per mile from January through June 2026 and $0.76 from July through December. For 1,000 eligible miles in October, the calculation is $760. This optional tax rate does not by itself establish an employee’s reimbursement entitlement.

How much is reimbursed per kilometre?

The amount paid is the amount established by your expense policy or reimbursement agreement. A published tax rate serves a particular tax calculation; it is not automatically the amount owed to an employee. Record the rate used and its effective date.

Is the per-kilometre rate always the same?

No. Rates can vary with the vehicle, cumulative annual mileage or journey date. Record the date and vehicle for each trip. With an annual banded scale, the distance counter does not reset at the start of each month.

Why can the rate change with cumulative mileage?

Some schemes use annual distance bands; others keep a fixed rate until a specified change date. Do not reduce a rate after a mileage threshold unless the chosen scheme contains that band. Keep the accumulation rule with the calculation.

Official sources and reference period

Amounts apply to the periods specified in the answers. The official texts below explain the conditions and exceptions.

These answers describe general rules for the selected country and stated periods. They are not personalised legal, tax or accounting advice. Your accountant can help apply them to your business.