---
title: "What is mileage reimbursement?"
description: "Mileage Reimbursement explained in plain English: definition, how it works, an example, and how it appears in QuickBooks and Xero."
url: https://ledgerbpo.com/glossary/mileage-reimbursement/
updated: 2026-09-11
publisher: LedgerBPO (SS Support Network LLC)
language: en-US
---

# What is mileage reimbursement?

Glossary

Mileage reimbursement is payment to an employee for using their personal vehicle for business travel, calculated by multiplying business miles driven by a per-mile rate, often the IRS standard mileage rate. It covers gas, wear and maintenance rather than requiring separate receipts for each.

Updated September 2026

## How mileage reimbursement works

Employees log each trip's date, starting point, destination and business purpose, along with the miles driven, using a mileage log or a tracking app. Commuting between home and a regular workplace generally does not count as reimbursable business mileage, which is a common point of confusion for new employees.

Reimbursement paid at or below the IRS standard mileage rate is not treated as taxable income to the employee, while a company can choose to pay a lower or higher rate, though amounts above the IRS rate can become taxable. The rate is published annually and changes based on fuel and vehicle costs. Some businesses instead pay a flat monthly car allowance rather than a per-mile rate, which is simpler to administer but is generally treated as taxable wages unless it is paired with an accountable mileage log that supports the business-use portion.

## Example

An employee drives 240 business miles in a month visiting client sites, tracked with dates and destinations in a mileage log. Using the IRS standard mileage rate, the reimbursement is calculated and paid alongside the next expense report, coded to a vehicle or travel expense account, with no separate fuel or maintenance receipts required. If the same employee also drives 60 miles to pick up supplies for the office later that month, those miles are added to the log and reimbursed at the same per-mile rate on the next expense report.

## Mileage reimbursement in QuickBooks Online vs Xero

QuickBooks Online has a built-in mileage tracker in its mobile app that logs trips using GPS and calculates reimbursement using the current IRS rate automatically. Xero does not include a native mileage tracker, so businesses typically pair it with an app like Expensify or MileIQ and import the approved reimbursement as a bill.

## Related terms

- [Expense report](https://ledgerbpo.com/glossary/expense-report/)
- [Per diem](https://ledgerbpo.com/glossary/per-diem/)
- [Petty cash](https://ledgerbpo.com/glossary/petty-cash/)
- [All terms](https://ledgerbpo.com/glossary/)

## How LedgerBPO handles mileage reimbursement

We review mileage logs for completeness, apply the correct reimbursement rate, and code approved amounts to the right expense account alongside your regular accounts payable run. This keeps vehicle reimbursements consistent and properly documented in case a rate or a total is ever questioned.

[Receipts coded, policies enforced](https://ledgerbpo.com/services/expense-management/)

Next step

## Books closed. Invoices paid. Every month.

Tell us what is going on with your books or billing. You will hear from a named person within 1 business day, with a custom quote and a plan for the first close.

- Reply from a named person within 1 business day
- No setup fee, month-to-month
- Your software, your data, no lock-in

Start with a custom quote

[Get a custom quote](https://ledgerbpo.com/get-a-quote/) [Book a 20-minute call](https://ledgerbpo.com/book-a-call/) Or call [+1-657-777-0006](tel:+16577770006) during US, UK or Australian business hours.

---

Source: https://ledgerbpo.com/glossary/mileage-reimbursement/ · Contact: https://ledgerbpo.com/contact/ · Full site map for agents: https://ledgerbpo.com/llms.txt