California Mileage Reimbursement

In California, specific regulations govern how companies reimburse their employees for work-related expenses, including mileage reimbursement.

If you’re a business owner and your employees use their personal vehicles for business purposes, or if you are an employee using your personal car for business-related driving, keep reading. 

California Law and Labour Code Section 2802

Under California Labor Code Section 2802(a), employers must cover necessary costs employees incur while performing their duties. 

This includes what is referred to as "all reasonable costs" in Section 2802(c).

If a job requires an employee to drive frequently but does not provide a company vehicle, the employee is expected to use their personal car for work purposes.

Because of this, when employers reimburse employees for mileage, they need to account for more than just fuel costs. 

Mileage reimbursement in California is meant to cover all costs of owning and operating a personal vehicle for the business portion of its use. These costs include depreciation, insurance, road tax, leasing payments, fuel, maintenance, etc.

Essentially, mileage reimbursements are meant to fairly compensate employees for the overall cost of using their personal vehicle for business purposes—not just gas expenses.

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Rules for mileage reimbursement in California

Besides the more strict rule of covering “all necessary expenditures or losses,” the rules in California are the same as in the rest of the country. 

As an employer, you can choose between different methods for reimbursing mileage in California:

• Lump-sum payments
• A cents per business mile rate
• Actual expense reimbursement
• A mix of the above

You can ask employees to provide records and/or receipts of their business mileage expenses to receive reimbursement. 

Need to know more? Visit our guide about Mileage Reimbursement Rules for Employers now.

Following these simple guidelines from the IRS is a good starting point:

• Reimbursements are for business-related trips, not commutes to and from work.
• Employees need to document their mileage and payments.
• Any extra mileage reimbursements must be returned within a reasonable timeframe.
• Employees should maintain timely mileage records, ideally updating them right after the trip.

If you have multiple employees getting reimbursed, an automatic logbook with easy approval might be a good idea. Learn more about Teams from Driversnote now. 

California mileage rate 2025

California mileage rate 2025
The 2025 IRS mileage rate for business miles is 70 cents per mile.

California mileage rate 2024 & 2023
The 2024 standard IRS mileage rate for business miles is 67 cents per mile. The mileage rate in 2023 was $0.655 per mile.

Looking for moving, charity, or medical rates as well? See all current IRS mileage rates.

How to reimburse employees for business miles in California 

One of the most common mileage reimbursement programs is the cents per business mile rate due to its administrative simplicity. Employees are reimbursed at a flat rate per mile and receive the payout each month. The IRS sets standard mileage rates each year.

How to keep a compliant mileage log in California?

As an employer, you can ask for different types of documentation based on your reimbursement policies. Typically, a log would include: 

• The miles driven for work
• The date
• The Destination
• The purpose.

If the reimbursement program is based on the actual expense method, all receipts for any vehicle-related costs must be kept and documented. Finally, documenting the total miles and calculating the business use percentage for your vehicle is also essential. 

Don’t miss our blog: How To Keep an IRS-Compliant Mileage Log For Taxes

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