Planes, Trains, and Midyear Employee Mileage Reimbursement
New Mileage Rate as of 7/1/26
In a rare midyear update, the IRS has increased the standard business mileage rate, effective 7/1/2026, to 76 cents per mile (up 3.5 cents from 72.5 cents). The standard rate is used to calculate the deductible cost of operating a vehicle for business purposes. It is important to remember that employers are required to fully reimburse employees for all expenses incurred within the scope of their employment, and reliance on the IRS mileage rate is considered sufficient to satisfy this obligation.
Employers will need to maintain two separate mileage rates for the year, depending upon the actual dates of driving. Those who maintain strict budgets for travel expenses should adjust budgets for the second half of the year.
Meal and Travel Expense Reimbursement Policies
If you have a formal Travel Reimbursement Policy, don’t forget to update it with the new mileage rate. It’s also a good time to review it to make sure it covers the basics:
A strong policy will also include clear instructions on receipts and reimbursement submissions, along with reasonable deadlines for submitting expense reports. Any exceptions should require written approval of an executive.
- • Eligible expenses, such as general travel arrangements, airfare, lodging and transportation;
- • Meals and tips, including individual daily meals and business meals with clients;
- • Exclusions, such as personal entertainment, personal phone calls, and non-essential expenses;
- • Company policy on alcoholic beverages, non-client events, and spouse/family guests; and
- • Spending limits, caps and rates.
A strong policy will also include clear instructions on receipts and reimbursement submissions, along with reasonable deadlines for submitting expense reports. Any exceptions should require written approval of an executive.
Don't Forget About Travel Time
Oh, but wait, there’s more! Many employers are unaware that non-exempt employees must be paid for travel time, in addition to mileage and expense reimbursements. Whenever a non-exempt (hourly) employee is under the employer’s control, they must be paid, including for travel time. (Please note, the “under the employer’s control” is legal terminology, not language we made up for this blog. It’s worded in a way to differentiate from voluntary vs. required activities)
Travel time must be paid when:
Also note that travel time not spent working does not have to be paid at the non-exempt employee’s normal rate of pay, provided the employee is not performing their normal duties during that time. For example, sitting in the airport or driving a car may be paid at a lower rate, as long as it is not less than minimum wage. However, should an employer wish to exercise this option, it should be communicated clearly and included in the travel policy. For more information and detailed guidance on creating a meal and expense reimbursement policy, our experienced consultants can help! Contact us to set up a confidential discussion.
- • An employee travels between job sites or locations during the day.
- • An employee who is assigned to run errands and special tasks.
- • An employee is sent to another location farther away from the normal commute, or must return home from a farther commute. Similar to mileage reimbursement, only the excess time is compensable. The normal commute is not compensable.
- • Out-of-town or overnight trips, including all transit time, regardless of whether they occur during normal hours.
- • All time spent on a trip under the control of the employer is typically compensable (we flagged this legal lingo earlier but as “under the employer’s control” makes a reappearance, we thought it deserved another disclaimer). Sleeping and sightseeing would not be considered as under the employer’s control.
Also note that travel time not spent working does not have to be paid at the non-exempt employee’s normal rate of pay, provided the employee is not performing their normal duties during that time. For example, sitting in the airport or driving a car may be paid at a lower rate, as long as it is not less than minimum wage. However, should an employer wish to exercise this option, it should be communicated clearly and included in the travel policy. For more information and detailed guidance on creating a meal and expense reimbursement policy, our experienced consultants can help! Contact us to set up a confidential discussion.
