At the end of each year, the IRS updates its standard mileage rate for the upcoming year. Typically, the number they land on—which is based on an annual study of the fixed and variable costs of operating a vehicle—is only a change of one to two cents per mile from the previous year. At the end of 2022, the IRS responded to the rising costs of car ownership in a big way.
The 2023 rate of 65.5 cents per business mile is 7 cents higher than the initial 2022 rate of 58.5 cents per mile and 3 cents higher than the amended 2022 rate of 62.5 cents per mile in place for the final six months of the year. For those keeping count at home, this is the third time since 2021 that the agency has decided to raise this ever important benchmark. In fact, since 2017, the IRS has increased the standard mileage rate by 22% as the cost of owning and operating a car has grown more expensive.
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What Do Standard Mileage Rate Increases Mean for Your Business?
In 2017, the standard mileage rate was 53.5 cents per business mile. That means that for an employee who drove 10,000 miles in their own vehicle, you reimbursed them $5,350. At the 2023 rate, that same employee is reimbursed $6,550.00, a difference of $1,200. If you manage a fleet of several hundred mobile employees, you’ll find yourself paying thousands of dollars more in mileage reimbursements than you did five years ago.
When you’re dealing with an expense item as large as mileage reimbursement, it’s important that your business is getting the number right or you could end up paying out more than you actually should be. Whether you’re relying on manually maintained mileage logs, haven’t streamlined your expense reporting approval process, or lack robust internal controls that should alert you to unauthorized behaviors, there are many reasons why your company may not be getting the most out of your mileage reimbursement program. Fortunately, CompanyMileage has the technology to resolve any issues you’re currently facing.
Start Managing Mileage Reimbursement the Right Way
Mismanagement of the mileage reimbursement process costs organizations thousands of dollars each year, and that’s before you even factor in the costs that come from a mileage rate increase. SureMileage by CompanyMileage helps you save money by using a different approach to calculating mileage reimbursement.
With SureMileage, employees report their starting and ending points, and the system calculates the most direct driving route between them. The app then calculates the expenses to be reimbursed based on those predetermined rates. At no point will employees need to report odometer readings or use a mileage log, and it only takes a few minutes for them to submit their trips for review. At that point, our system automatically notifies those individuals in your approval workflow to review and approve them. Once approved, SureMileage’s ability to integrate with your accounting or payroll software ensures that issuing reimbursement payments is a smooth, timely process.
No matter what the IRS standard mileage rate is now or in the future, you want to be ready with expense reimbursement software that helps your company save money. Join the thousands of CompanyMileage customers who have saved up to 30% on reimbursement expenses today. Request a demo to learn more.