If you’re a founder with 15 employees and three of them drive regularly for client visits, you probably need more than “submit your receipts and we’ll figure it out.”
Setting up a mileage policy sounds tedious. But it doesn’t have to be complicated. Here’s what actually matters.
Why You Even Need a Written Policy
Look, if it’s just you and a co-founder, maybe you don’t. But once you have employees driving their own cars for work, you need something written down. A few reasons:
- Fairness. Without a policy, someone always feels shortchanged. “Wait, you reimbursed Jake for driving to that conference but not me?”
- Taxes. The IRS has opinions about how mileage reimbursements work. If you’re paying above the standard rate (72.5¢/mile in 2026), part of that might be taxable income. If you’re paying below, your employees might be getting screwed.
- Sanity. A policy means you’re not making judgment calls every time someone submits an expense.
The Five Things Your Policy Needs
You can make this complicated or you can make it simple. Here’s what actually has to be in there:
1. What counts as reimbursable driving
Be specific. “Business purposes” is too vague. Does driving to the airport for a work trip count? (Usually yes.) Does the commute to your regular office? (Almost always no.) What about working from home and driving to HQ for a meeting?
Most policies I’ve seen that work well say something like: “Driving between work locations, to client sites, or to business-related events. Regular commutes to your primary office are not reimbursable.”
2. The rate you’ll pay
Easiest approach: use the IRS standard rate. For 2026, that’s 72.5 cents per mile. It’s simple, defensible, and keeps you out of tax complications.
Some companies pay less to save money. That’s legal, but if you’re paying significantly below the IRS rate, you’re effectively asking employees to subsidize business travel. Not great for morale—or retention.
3. What documentation you need
This is where most informal systems fall apart. At minimum, you need:
- Date of the trip
- Starting and ending location
- Business purpose (one sentence is fine—”client meeting with Acme Corp”)
- Miles driven
Odometer photos? Receipts? Those are nice-to-haves. The IRS cares about contemporaneous records—meaning logged at the time, not reconstructed later. An automatic mileage tracking app is way more reliable than asking people to fill out spreadsheets.
4. Submission deadlines and payment timing
When do expenses need to be submitted? Weekly? Monthly? Within 60 days? Pick something and stick to it. I’ve seen companies with 90-day cutoffs, which is reasonable—anything older than that is a records nightmare anyway.
Also tell people when they’ll get paid. “Approved expenses are included in the next regular payroll” is fine. Just set expectations.
5. Who approves what
For small teams, maybe everyone submits to one person. For bigger companies, usually direct managers approve. Either way, write it down so there’s no confusion.
The Mistakes I See Over and Over
Treating commutes as business miles. Your regular drive to work isn’t deductible, and if you’re reimbursing it, you’re creating a taxable benefit. Just don’t.
Accepting “estimates.” “I drove about 200 miles this month” isn’t documentation. If the IRS audits your company’s expense records, estimates won’t hold up.
Inconsistent enforcement. If sales gets reimbursed for everything but support has to fight for every mile, you’ve got a morale problem brewing.
Waiting too long to set this up. The longer you operate without a policy, the harder it is to implement one. People get used to the Wild West.
A Simple Template
Here’s the bones of what most small-to-medium companies need:
Mileage Reimbursement Policy
[Company] reimburses employees for business-related driving at the current IRS standard mileage rate (72.5¢/mile for 2026).
Eligible trips: Client visits, travel between work locations, business errands, conferences and events.
Not eligible: Regular commute to your primary work location, personal errands combined with work trips.
Documentation required: Date, start/end locations, business purpose, miles driven. Use [tracking method] to log trips.
Submission: Monthly, by the 5th of the following month.
Approval: Direct manager reviews and approves. Approved expenses paid with regular payroll.
Customize it for your situation, run it by your accountant or HR advisor, and you’re done. Really.
The goal isn’t to create a bureaucratic masterpiece. It’s to have something written down that treats everyone fairly and keeps you out of trouble. That doesn’t take 50 pages.
If you manage a team that drives regularly—especially in home healthcare—getting this right is a retention issue, not just a compliance one. And if you need a platform to handle team-wide tracking and reimbursement, see how OdoAlibi works for businesses.
