How to Calculate Mileage Reimbursement

For freelancers, employees, and small business owners, using a personal vehicle for work-related travel can quickly add up in expenses. To make things fair, many companies and tax agencies allow you to claim mileage reimbursement. This means you’re compensated for fuel costs, wear and tear, and other operating expenses whenever you drive for business purposes.

In this guide, we’ll break down exactly what mileage reimbursement is, how to calculate it, and the best practices for tracking your trips. By the end, you’ll know how to ensure you’re never underpaid for the miles you drive—by using our Mileage Reimbursement Calculator you'll be able to simplify the process and hopefully understand how to calculate mileage reimbursement.

What Is Mileage Reimbursement?

Mileage reimbursement is a way to cover the expenses of using your personal car for work. Instead of trying to tally up receipts for gas, oil, repairs, and insurance, organizations typically pay employees or contractors a flat rate per mile driven. This rate is designed to reflect average driving costs.

For example, if your company reimburses you at $0.67 per mile and you drive 200 miles in a month for work, you’d be owed $134 in reimbursement. It’s a simple formula—but it’s important to understand what counts as “business miles.”

What Counts as Business Mileage?

Not every trip you take in your car can be claimed for reimbursement. Here are the most common examples of business mileage:

However, commuting from your home to your regular workplace usually does not qualify. Most tax authorities consider commuting a personal expense.

Current Mileage Reimbursement Rates (2025)

Reimbursement rates vary depending on where you live. Here are some of the most common benchmarks for 2025:

Always check your local tax authority’s website for the most up-to-date rates, as these figures change annually to reflect fuel and maintenance costs.

How to Calculate Mileage Reimbursement Step by Step

The formula for calculating mileage reimbursement is straightforward:

Total Reimbursement = Business Miles × Reimbursement Rate

Let’s walk through an example:

  1. Track your mileage: Say you drove 320 miles in January for work purposes.
  2. Apply the rate: If you’re in the US, multiply 320 × $0.67.
  3. Result: Your reimbursement comes out to $214.40.

If you’re in the UK and drove 12,000 miles in a year, your calculation would be:

Save Time With a Mileage Calculator

Doing these calculations manually can be time-consuming—especially if you drive a lot. That’s why we built the free Mileage Reimbursement Calculator on TaskNectar. Just enter your miles driven and reimbursement rate, and it will automatically calculate the total for you. No spreadsheets or mental math required!

Methods for Tracking Mileage

To be reimbursed fairly, you’ll need accurate records of your trips. Here are three common ways to track your mileage:

1. Odometer Readings

Write down your odometer reading at the start and end of each business trip. Subtract the two numbers to get the miles traveled.

2. Mileage Logs

Keep a notebook or spreadsheet with details of each trip, including date, purpose, starting point, destination, and miles driven.

3. Mileage Tracking Apps

Apps like MileIQ or TripLog can automatically record your trips using GPS, making record-keeping effortless.

Tips for Maximizing Your Mileage Reimbursement

Frequently Asked Questions About Mileage Reimbursement

Can I claim mileage for commuting?

No. Daily commuting from home to your regular workplace is usually considered a personal expense and not eligible for reimbursement.

What if my employer reimburses at a lower rate than the IRS or HMRC standard?

Employers aren’t always required to match the standard rate. If they reimburse less, you may be able to claim the difference as a tax deduction (rules vary by country).

Do reimbursement rates include fuel prices?

Yes. The standard mileage rate is designed to cover fuel, maintenance, depreciation, and insurance. You don’t need to submit gas receipts separately if using the standard rate.

What if fuel prices rise sharply?

Rates are adjusted annually to account for rising or falling fuel and vehicle costs. However, if prices rise mid-year, you’ll need to wait until the next adjustment unless your employer offers additional support.

How do I handle mileage reimbursement if I lease my car?

You can still claim mileage reimbursement when using a leased car for business. The reimbursement covers wear and tear regardless of ownership.

What records should I keep?

Keep a mileage log (digital or paper) with dates, locations, and trip purposes. Most tax authorities require this documentation if you’re audited.

Example Scenarios

Freelancer Example

Sarah is a freelance graphic designer who drives to meet clients around her city. In January, she drives 400 business miles. Using the IRS rate of $0.67, her reimbursement is 400 × 0.67 = $268. She records this in her invoice to the client.

Employee Example

James works for a marketing agency and regularly travels between client offices. In one month, he drives 600 miles. His company reimburses him at the IRS rate, so he claims 600 × 0.67 = $402 in mileage reimbursement.

Small Business Owner Example

Anna runs her own catering business. Over the course of the year, she drives 11,000 miles for deliveries and event setups. Using the UK HMRC system, she claims 10,000 miles × 45p = £4,500 and 1,000 miles × 25p = £250, totaling £4,750.

Why Mileage Reimbursement Matters

Without proper reimbursement, the costs of using your personal car for work can eat into your income. Mileage reimbursement ensures fairness, transparency, and compliance with tax laws. For businesses, it also boosts employee satisfaction by preventing workers from being out-of-pocket for essential travel.

Final Thoughts

Calculating mileage reimbursement doesn’t have to be complicated. By tracking your trips, applying the correct rate, and keeping good records, you can make sure you’re always compensated fairly. And with tools like the free Mileage Reimbursement Calculator from TaskNectar, you can calculate your mileage reimbursement instantly—saving you time and stress.