(November 27, 2012) The Internal Revenue Service recently issued the 2013 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
The rates take effect on January 1, 2013. According to the IRS, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 56.5 cents per mile for business miles driven;
- 24 cents per mile driven for medical or moving purposes;
- 14 cents per mile driven in service of charitable organizations.
The rates for business miles driven and for medical and moving purposes during 2013 increase 1 cent from the 2012 rate. A taxpayer always has the option of calculating the actual costs of using his/her vehicle rather than using the standard mileage rates, the IRS said in its statement.
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.
The Division of Labor Standards Enforcement 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. 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, however, the employer must pay the difference.
Business vehicle expenses do not include only gasoline, but also wear and tear (depreciation), repairs, oil, insurance and other costs. Federal requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical or charitable expense are listed in Rev. Proc. 2010-51.
California Chamber of Commerce members can read more on timely payment and reimbursement of employee expenses in HRCalifornia's HR Library. Not a CalChamber member? Sign up for a 15-day Free Trial.
Staff Contact: Gail Cecchettini Whaley