Business mileage calculator

The maths is simple; what makes it defensible is the data that comes with it. The calculator asks for:

- Distance driven, in miles. Round trip if it applies, and consistent with the stated origin and destination — distance is the one figure a reviewer can check on a map.
- Your company's rate per mile. The one set by your internal policy. The calculator will not fill it in for you: it is a company decision, not a technical input.
- Date, origin, destination and business reason. The four inputs that turn a number into a justifiable trip. A reason written by whoever travelled, on the day they travelled, is worth more than any reconstruction afterwards.
- Employee and entity or cost centre. Who travelled and which budget the expense belongs to — essential if you operate across several entities.
- Tolls and parking, if any, with receipts. They sit alongside the per-mile rate, not inside it.

With that, the calculator shows the total to reimburse under your policy, the IRS standard mileage rate as a reference, and the difference between the two — and you can export the breakdown as CSV to attach to the expense.

The company decides how much it reimburses; the tax rules decide how much of that reimbursement is deductible and how much becomes taxable income for the employee. Blurring those two questions is the most expensive mistake in this category of spend.

In the United States the reference is concrete. The IRS publishes an optional standard mileage rate each year: for 2026 it is 72.5 cents per mile for business use from 1 January, raised to 76 cents per mile for travel from 1 July 2026 (Notice 2026-10, revised by IRB 2026-29).

Two mechanics matter in practice. First, the rate is optional: you may instead reimburse actual costs, but you have to pick a method and apply it consistently. Second, the way the reimbursement is paid decides its tax treatment. Under an accountable plan — a business connection, substantiation within a reasonable time, and any excess returned to the employer — reimbursements at or below the standard rate are not wages and are not reported on the employee's W-2. Paid outside an accountable plan, or above the standard rate, the excess is generally taxable wages.

Three operational consequences:

- Your company can pay more than the standard rate. The internal policy is yours to set; the excess simply has its own tax treatment, and payroll needs to know about it.
- Your company can pay less. The standard rate is a ceiling for tax-free treatment, not an obligation to pay — how much you reimburse is a policy decision.
- Without substantiation there is no accountable plan. The tax-free treatment presumes you can show the trip was real: date, origin, destination and business purpose are the condition, not bureaucracy.

This page describes the general framework; how it applies to your case — accountable-plan design, fixed-and-variable-rate plans, special situations — is a question for your tax adviser.

The field that saves the most arguments is the rate applied: when the policy changes — as the IRS rate itself changed mid-year in 2026 — earlier expenses must keep the rate that was in force when they were incurred. A history recalculated with the new rate is a history that no longer matches what was actually paid.

Without recommending any particular figure — that is each company's decision — three principles help you set it well:

- Decide with reference to the tax framework, not in ignorance of it. Paying exactly the standard rate keeps things simple; paying more is legitimate and creates a taxable portion you must handle as such; paying less shifts cost to the employee. All three are valid — what does not work is not knowing which one you have chosen.
- Write the rate, its effective date and its source into the expense policy. "Reimbursed at X cents per mile from 1 January" answers in advance the question this page is named after.
- Review it when the rules or the real cost of driving change. The IRS rate was adjusted mid-year in 2026; a policy nobody reviews ends up paying a figure that no longer means anything.

A calculator settles one expense; it does not settle the process. Well-run mileage behaves like any other company expense: it is submitted with its data complete, checked against policy, approved by whoever holds authority over that budget, paid as approved, and leaves a history finance can show a reviewer.

That is what spend-control software adds over a spreadsheet: receipts stay attached to the expense, policy rules are checked at submission rather than at month-end, approval is recorded with identity and date, exceptions are documented, and the whole set exports to accounting with its full trail. With Clara Global, receipts and approval history travel attached to each expense, the approval rules your finance team defines are evaluated against the expense itself, and the result is a reimbursement report ready to pay that your team runs through its own bank — Clara Global does not execute the transfers.

Mileage is also the best entry point for tidying up everything else: it is the most frequent expense, the most sensitive for the person claiming it, and the one that best reveals whether your policy is genuinely written down or lives in someone's memory.

- Reimbursing with no origin, destination or reason. The amount can be right and the expense still unjustifiable: the tax-free treatment presumes you can show the trip was real.
- Folding tolls and parking into the per-mile rate. They belong alongside it, with receipts; mixed in, neither the tax treatment nor the reconciliation comes out right.
- Applying the new rate to old trips. Every expense keeps the rate that was in force on its date.
- Ignoring the excess over the standard rate. If the policy pays above the reference, that portion has its own tax treatment and payroll must receive it identified.
- Leaving mileage outside the approval flow. An expense paid "because it is always paid" is exactly the pattern a reviewer samples first.