As we approach 2023, there are several changes that are expected to take place in the mileage expense reimbursement world. For many employees, the mileage reimbursement is a crucial aspect of their job, especially for those who have to travel a lot. In this article, we’ll take a closer look at the changes that are likely to happen in 2023 and how they will affect employers, employees, and the industry as a whole.
What is Mileage Expense Reimbursement?
Mileage expense reimbursement is a payment made by an employer to an employee for the use of their personal vehicle for business purposes. This payment is intended to cover the cost of gas, maintenance, and wear and tear on the vehicle. In most cases, the reimbursement is based on the number of miles driven, and the rate per mile is set by the employer.
Changes to Expect in 2023
One of the major changes that is expected to take place in 2023 is the increase in the standard mileage rate. The standard mileage rate is the rate at which the government allows employers to reimburse their employees for the use of their personal vehicle for business purposes. The IRS typically updates this rate every year, and the increase is expected to be significant in 2023 due to rising fuel costs and inflation.
In addition to the increase in the standard mileage rate, there may also be changes to the tax laws that affect mileage reimbursement. As of now, the tax laws allow employees to deduct their unreimbursed business expenses on their tax returns. However, this may change in 2023, and employees may no longer be able to claim these deductions.
How Will These Changes Affect Employers?
The increase in the standard mileage rate will have a direct impact on employers. Employers will need to adjust their mileage reimbursement policies to reflect the new rate. This may mean that employers will need to increase their reimbursement rate, which could lead to higher costs for the company.
In addition, changes to the tax laws may also have an impact on employers. If employees are no longer able to deduct their unreimbursed business expenses on their tax returns, this may make it more difficult for employers to attract and retain employees who rely on mileage reimbursement as a significant part of their income.
How Will These Changes Affect Employees?
For employees, the increase in the standard mileage rate will be a welcome change. This means that they will be reimbursed at a higher rate for the use of their personal vehicle for business purposes. However, changes to the tax laws may have a negative impact on employees who rely on the mileage reimbursement as a significant part of their income.
In addition, employees will need to keep track of their mileage more accurately to ensure that they receive the correct reimbursement. This may mean keeping a detailed log of their trips, which can be time-consuming and tedious.
What Does This Mean for the Industry?
The changes to mileage expense reimbursement in 2023 will have a significant impact on the industry as a whole. Higher reimbursement rates could lead to more employees using their personal vehicles for business purposes, which could lead to increased wear and tear on the vehicles and higher maintenance costs.
In addition, changes to the tax laws may make it more difficult for employers to attract and retain employees who rely on the mileage reimbursement as a significant part of their income. This could lead to a shortage of qualified candidates in certain industries.
Conclusion
Overall, the changes to mileage expense reimbursement in 2023 will have a significant impact on employers, employees, and the industry as a whole. While the increase in the standard mileage rate will be a welcome change for employees, changes to the tax laws may have a negative impact on their income. Employers will need to adjust their policies to reflect these changes, which could lead to higher costs for the company. As always, it’s important to stay up-to-date on these changes and adjust your policies accordingly.