Track mileage automatically
Get started
July 05, 2022 - 2 min read

California mileage reimbursement

California sets strict labor laws, ensuring that employees are reimbursed for any expenses they incur while on duty. 

One of these expenses is using one’s personal vehicle for business-related purposes.

The law states that “an employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful.”

In line with the set labor laws, mileage reimbursement in California is mandatory - employers must pay out mileage reimbursement in order to be compliant.

Mileage reimbursement in California

There are a few different methods by which employers can reimburse employees for their mileage in California:

  • Lump-sum payments
  • A cents per business mile rate
  • Actual expenses reimbursement
  • A mix of the above

Learn more about the types of employee mileage reimbursement.

Mileage reimbursement in California is meant to cover all costs of owning and operating a personal vehicle for the business portion of its use. These costs include depreciation, insurance, road tax, leasing payments if any, depreciation, fuel and maintenance and more.

Employers will generally require that employees provide records and/or receipts of their business mileage expenses in order to receive reimbursement.

California mileage rate

One of the most common mileage reimbursement programs is the cents per business mile rate, due to its administrative simplicity. Employees are reimbursed at a flat rate per mile and receive the payout each month. In most cases, the mileage reimbursement is not taxed, as it is not considered a benefit.

The IRS sets standard mileage rates each year. Employers are not required to provide the official rate - they can choose to pay out a lower or higher rate per mile. If you are reimbursed at a rate higher than the official, the excess will be taxed as income.

California mileage rate in 2022

The official IRS business mileage rate for 2022 is:

  • $0.625 per mile from July 1 to December 31, 2022
  • $0.585 per mile from January 1 to June 30, 2022.

The IRS revised the standard mileage rate during the year due to the rising fuel prices in the country. See the IRS 2021 mileage rate.

Mileage record requirements

Depending on the method by which employees are reimbursed, employers may require different records. Some common records will include the miles an employee has driven for business purposes and the date and destination of each trip. If your employer reimburses mileage by the actual expenses method, they will also ask for receipts for car expenses. You will still need to record your mileage in order to work out the business use percentage of the vehicle. Learn more about the IRS mileage log requirements.

FAQ

The standard mileage rate set by the IRS, applicable in California, is 62.5 cents per business mile from July 1st, 2022. The mileage reimbursement rate for the first half of the year was 58.8 cents per mile.
To calculate your mileage reimbursement, simply multiply your business miles by the mileage rate your employer reimburses you at. For example, if you drove a total of 500 miles during June 2022, and your employer uses the standard mileage rate set by the IRS, your calculation will be the following: 500 miles x 0.585 cents per mile = $292.5 mileage reimbursement.

How to automate your mileage logbook

Manually filling out your logbook can get tedious - see how to automatically track trips for your mileage reimbursement or deductions.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied upon for, legal, tax or accounting advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal, tax or accounting advisor.