On December 14, the Internal Revenue Service (IRS) announced a slight increase in the 2024 optional standard mileage rates for business use (as this rate is based on an annual study of the fixed and variable costs of operating an automobile). Meanwhile, the rate for medical and moving purposes, which is based on the variable costs, will decrease slightly.
On January 1, 2024, the standard mileage rates — which are used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes — for use of a car, van, pickup or panel truck will be:
- 67 cents per mile driven for business use, an increase of 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, as well as gasoline and diesel-powered vehicles.
Under California Labor Code section 2802, employers must fully reimburse employees for all expenses actually and necessarily incurred. Many employers typically choose to use the IRS mileage reimbursement rate, but its use is optional. Both the California courts and the Division of Labor Standards Enforcement (DLSE) has stated that using the IRS mileage rate will generally satisfy an employer’s obligation to reimburse for business-related vehicle expenses, absent evidence to the contrary.
However, if an employee can show that the chosen mileage reimbursement rate, even the IRS rate, does not cover all actual expenses the employee has incurred, the employer must pay the difference. Business vehicle expenses include not only gasoline, but also wear and tear (depreciation), repairs, oil, insurance and other costs.
As they prepare for January 1, employers should ensure that their expense reimbursement policies are updated to reflect the new, higher IRS mileage rate.
Katie Culliton, Editor, CalChamber
CalChamber members can read more about Expense Reimbursements in the HR Library. Not a member? See how HRCalifornia can help you.
