If your company pays you back when you use your own car for work, that’s mileage reimbursement. Essentially, it’s a payment from your employer to cover the costs of using your personal vehicle for business trips.
So, the big question is: Is mileage reimbursement taxable? The answer is usually no, as long as it follows the IRS rules.
The IRS has specific requirements you need to meet in order for your mileage reimbursement to be considered tax-free. The two biggest factors are the IRS standard mileage rate and something called an “accountable plan.” Let’s take a closer look at how these work.