IRS Mileage Reimbursement for Businesses

• The Internal Revenue Service allows businesses to deduct travel expenses related to business travel on their income taxes. In most cases, employers pass this savings or refund along to their employees if they spent money on travel themselves. Because it's hard to itemize travel costs associated with driving in the same way as for maintenance or repairs, the IRS provides a per-mile deduction for travel expenses. As of 2011, the standard rate allowed by the IRS was 51 cents per mile.
  
  

Commutes Generally Not Deductible

• In most cases, the IRS does not allow employees or businesses to deduct the costs of daily commutes. Mileage reimbursement is limited to more extended trips -- travel to other cities,for example. IRS mileage reimbursement rules require businesses to determine a "tax home" for travel purposes, which is usually the taxpayer's primary workplace, or residence if self-employed. Personal travel expenses can only be deducted if incurred as a part of business travel away from home.
  
  

Exceptions

• Even though the IRS prohibits the reimbursement of commuting expenses for tax purposes, there are a few limited exceptions. Small-business owners and self-employed taxpayers can log commuting mileage if they have two workplaces: one in the home, for which they claim a business deduction, and one at another location. This is because the IRS allows deductions between two business locations as a form of business travel. Business owners may also deduct the cost of commuting between one of their establishments and another. As with normal business expenses, the taxpayer should keep a careful record of this mileage.
  
  

Mileage Reimbursement Rules for Government Employees

• Government employees are usually reimbursed at the IRS standard mileage rate for any official business travel they do in a privately owned automobile. According to the General Services Administration, federal employees get a reimbursement of up to $0.51 per mile for automobile travel, consistent with IRS rules, and $1.29 for airplane travel. State governments also provide similar reimbursements. In both California and Washington state, for example, the state government reimburses workers for any travel to and from a temporary work site, as long as the employee has another, normal place of business. As with the IRS tax deduction, commuting expenses to an employee's regular work site are not reimbursable.