Commuting miles are the travel between the taxpayer’s home and primary work place, while business miles can be driven for various business reasons. Business miles are a deductible business expense, but commuting miles are not.
Mileage Feature | Business Miles | Commuting Miles |
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Reason for Travel |
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Tax Deduction | Calculated using
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Travel Destination |
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Note: The Tax Cuts and Jobs Act (TCJA) suspended the deduction for employee business expenses—including business mileage—for tax years through 2025. However, employers can still reimburse employee business miles tax-free; this reimbursement is not considered income.
Key Takeaways:
- When employers reimburse employees for commuting, the reimbursement is part of employee wages and subject to payroll tax.
- Employers can reimburse business miles with the reimbursement excluded from the employee’s income.
- Self-employed taxpayers should note that
- mileage expense deduction is unaffected by the TCJA
- those with a qualifying home office can optimize the mileage deduction since all work-related miles are deductible
What Are Commuting Miles
Commuting is the process of traveling to and from a taxpayer’s home and their regular work location—often an office. If a taxpayer doesn’t have a regular work location, then traveling to and from home to their first and last temporary work location is classified as commuting.
The only exception is if the temporary work location is outside the taxpayer’s metropolitan area, in which case the travel to and from home is business miles. A temporary work location is one where the taxpayer expects to work for less than a year. If at any point it becomes apparent the work location will last for more than one year, it becomes a regular work location—and transportation from home is commuting.
What Are Business Miles
Business miles are those traveled for business purposes. They include miles incurred for:
- Traveling from one workplace to the next, even if the workplaces are with different employers
- Traveling from your home to a temporary workplace, but only if you have a regular work location or the temporary work location is outside your metropolitan area
- Business activities (e.g. meeting clients and picking up office supplies)
Business miles can be deducted using the standard mileage or actual expense method.
- The standard mileage method involves multiplying the number of miles driven times the cents per mile established by the IRS every year.
- To use the actual expense method, you’ll first divide your total mileage by your business mileage. Then, you’ll multiply that percentage by your actual expenses such as gasoline or repairs to arrive at the dollar amount for the deduction.
Reimbursement of Business Miles vs Commuting Miles
Because the TCJA makes employee business expenses nondeductible—but still reimbursable—through 2025, employees are wise to seek reimbursement of their business miles from their employers as it is tax-free income to the employee. While reimbursement of commuting miles is great, it must be included in the employee’s income.
Commuting Mileage Reimbursement
As a general rule, when the employer reimburses an employee for the cost of commuting—even under an accountable plan—the reimbursement is part of the employee’s wages and subject to payroll tax (including FICA and federal income tax withholding). Some exceptions apply for commuting miles incurred in company vehicles as required by the employer for “noncompensatory business reasons.”
Business Mileage Reimbursement
Employers can reimburse employees for their business miles without the reimbursement being included in the employee’s income. In fact, California, Massachusetts, and Illinois require mileage reimbursement for business use of employee’s personal vehicles. This reimbursement is generally done using a per-mile rate and requires the employee to substantiate the business reason for the miles.
Business Mileage Categorization Examples by Worker Type
Employee Without Home Office
Delilah Driver is employed by BrandBolt Advertising, a company with two offices. Delilah gives daily presentations at client offices and makes occasional runs to the post office. For a six-month period, several clients will be meeting regularly with Delilah at BrandBolt’s second office. During that time, Delilah will be expected to work out of the second office and perform all of her professional duties there.
- Delilah’s mileage between her home and BrandBolt’s main office would be considered nondeductible commuter miles.
- Delilah’s mileage between her home and BrandBolt’s second office (when used as the temporary location) is deductible business mileage.
- The mileage between the client offices is deductible business mileage.
- The mileage to and from the post office is deductible business mileage.
While the mileage Delilah drives for her employer is deductible, the deduction provides no current advantage since it is a miscellaneous itemized deduction.
Employee With Home Office
We’ll now assume that Delilah Driver is employed by BrandBolt Advertising but uses her home office as her main worksite, per her employment contract. As in the previous example, Delilah gives daily presentations at client offices and makes occasional runs to the post office.
- The mileage between the client offices is deductible business mileage.
- The mileage to and from the post office is deductible business mileage.
- Mileage to and from BrandBolt’s main and second offices is deductible business mileage since her home office is her principal place of business.
As was the case with the previous example, the mileage Delilah drives for her employer from her home office is deductible, but the deduction provides no current advantage since it is a miscellaneous itemized deduction, and those deductions are suspended through 2025.
Self-employed With Home Office
Cathy Contractor works out of her home, creating decorative home and office decor pieces for sale. She is on the road frequently, promoting her work at trade shows and meeting with interior designers who may want to use her installations in office buildings. She also drives to pick up supplies and drop off completed projects to customers.
She does all of her administrative work from home and uses her home office as her principal place of business. She also is employed as a teacher and receives a W-2 from The Academy of the Arts.
- The mileage traveled between her home and the trade shows is deductible business mileage.
- The mileage traveled between her home and meetings with customers or potential customers is deductible business mileage.
- The mileage traveled between her home and picking up supplies and dropping off completed projects is deductible business mileage.
- The mileage traveled between any of the destinations listed above is also deductible business mileage.
- The mileage traveled between Cathy’s home and The Academy of the Arts is nondeductible commuter mileage.
When a home office is the principal place of business for a self-employed taxpayer, the drive between the home office and client location is considered business mileage. The following activities also constitute business mileage:
- Driving between different client locations
- Driving to pick up supplies or drop off orders
- Any mileage incurred in pursuit of business-related tasks
Self-employed With No Regular Work Location
Debbie Dancer has her own business dancing flamenco at various clubs around the state. During the week, she performs at various clubs located within a 5-mile radius from her house in Reading, Pennsylvania. On the weekends, she performs at a variety of clubs in Princeton, New Jersey, which is approximately 100 miles from her home.
Special rules apply to Debbie’s mileage since she has no regular work location. The clubs where she performs are considered temporary work locations.
Frequently Asked Questions (FAQs)
No. The IRS considers miles traveled to and from work to be the employee’s responsibility and not on par with business miles, which are eligible for a deduction.
The IRS commuting rule applies to employees who have access to a company vehicle for personal purposes. Personal use of a company vehicle generally results in taxable income. The IRS commuting valuation rule limits that income to $1.50 for each leg of a round-trip commute.
Business miles are calculated by summing the miles traveled for business activities. The deduction is calculated by multiplying the total mileage by the mileage rate published for the year by the IRS.
Bottom Line
Business miles include miles traveled between two office locations and miles traveled for business activities. Business miles exclude miles driven by an employee from home to their place of employment, as those are considered commuting miles. Business miles are deductible, whereas, generally, commuting miles are not.
