Mileage Allowance

Car mileage allowance is an amount of money that employers provide their employees to cover the costs associated with using their own vehicle for business purposes. These allowances are generally provided as a reimbursement for fuel, oil, and other related expenses incurred while traveling on company business. Mileage allowances may also include some portion of maintenance or insurance costs.

Employers typically use a standard rate when calculating car mileage allowances. This rate is set by the IRS and is based on the cost of operating that specific type of vehicle over a certain period of time.

The Internal Revenue Service (IRS) sets the standard mileage rate for business use of a vehicle at 57.5 cents per mile for 2020. This rate is used to calculate the deductible costs of operating an automobile for business purposes.