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New Year, New IRS Business Mileage Rate: Tips to Manage Reimbursement

by Donna Koppensteiner, SVP at Runzheimer

Now that the 2017 IRS Business mileage rate is out, it’s time for companies to strategically evaluate their business vehicle reimbursement policies to ensure they are appropriately reimbursing business drivers while keeping expenses to a minimum.

The recently-announced 2017 business mileage deduction rate of 53.5 cents represents a half-cent drop from 2016’s rate of 54 cents-per-mile. Historically, this rate—the standardized per-mile amount individuals and businesses can deduct on their taxes for business-related travel—tends to stay the same or rise year-over-year.

This year’s reduction is only the fifth time in 16 years that the rate has gone down. It comes on the heels of a major decrease in 2016, when the rate fell from 57.5 to 54 cents-per-mile. Since 1980, the IRS uses the data provided by Runzheimer to set the national rate.

Low fuel prices are one reason behind the 2-year downturn. However, fuel isn’t the only factor that determines the IRS mileage rate. Other vehicle-specific expenses like depreciation, maintenance, and insurance premiums also play a role. This year, broad increases in those costs—including a more than 5% boost in car insurance rates—largely counteracted the impact of low fuel prices, leading to a milder mileage rate decline than in 2016.

Maximizing Business Vehicle Programs in 2017

As the 2017 IRS mileage rate takes effect, it’s important for businesses to evaluate their existing business vehicle programs and look for ways to strategically retool them. Here are three key steps employers should consider as they approach business vehicle programs in the coming year:

  • Implement mileage tracking tools: According to Runzheimer’s 2016 Workforce Mobility Report, roughly half of businesses rely on manual methods of tracking miles, and as a result, the process can quickly become cumbersome and inaccurate, and lead to the accrual of avoidable support costs. But by harnessing mileage tracking tools, employers can automate a burdensome process and achieve greater accuracy as a result. Through refining the accuracy of mileage tracking, businesses that implement these tools can drive down their total mileage while remaining adherent to the IRS rate.
  • Manage business driver risk: When an individual is driving for business regardless of the reimbursement program, ensuring he or she has valid insurance. This should be on the top of your checklist. Currently, 46% of employers are not managing business drivers’ insurance. These employers are at risk and potentially significant financial burdens if an uninsured employee gets into an accident. By prioritizing risk management strategy, companies can prevent these potentially costly situations.
  • Manage all of your programs holistically: Every company is unique and every company manages to the unique needs of their employees. Companies may need to implement more than one business vehicle program. However, to maximize savings and efficiencies, businesses need to devise a unified business vehicle program approach. In fact, the Runzheimer report found that 64% of businesses report having multiple types of programs.

By adopting a careful and strategic approach to managing reimbursement, companies can prepare for the IRS’ modified mileage rate while at the same time positioning themselves for employee satisfaction and business cost savings in the New Year.

Donna Koppensteiner has more than 20 years of sales and business development expertise, the majority of which relates to the consumer travel, commercial fleet, and logistic services markets. As senior vice president at Runzheimer, Donna is responsible for driving business growth through strong business knowledge, analytical skills, and a dedication of fostering a collaborative team environment.

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New Year, New IRS Business Mileage Rate: Tips to Manage Reimbursement


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