Auto Reimbursement

by Jessica Sullins

How much do you reimburse your employees to drive their personal car for business use? Surprisingly, the Federal law does not require employers to reimburse employees for the use of their personal car!

However, most employers do reimburse employees some amount. Employers who choose to reimburse mileage are generally free to structure that reimbursement plan in any manner they wish.

The current 2017 IRS standard rate is 53.5 cents per mile for business miles driven.

The IRS rate represents the maximum amount at which mileage may be reimbursed without becoming taxable wages. Employers that reimburse the IRS rate, or a lower rate, may deduct the reimbursement as a business expense.

The Survey Says
According to AAIM Employers’ Association’s 2017-2018 Policies and Benefits Survey of 95 St. Louis and Central Illinois businesses, 77.9% of employers reimburse their employees the current IRS rate.

Issues to Consider
*Car insurance – Employees who are expected to use their personal vehicles for company business should be required to show proof of current insurance coverage to protect against liability.

*Liability Insurance – Employers should also consider adding a liability insurance policy as part of their own insurance coverage. This will provide insurance protection against claims that might result from work-related accidents.

Jessica Sullins, PHR is on the Research and Solutions Team for AAIM Employers’ Association, which helps Missouri and Illinois companies manage their people and processes. For more information, contact the Research and Solutions Team at solutions.team@aaimea.org.