For most, this new year represents a clean slate, a time to reflect and refocus. For CFOs, it also brings the 2021 standard mileage rate.
IRS just recently announced the rates your finance team will use for the next year. And this time, the Service is decreasing the amount they can reimburse employees tax-free on the road.
As of Jan. 1, 2021, the rates are:
- 56 cents per mile for business miles driven (down from 57.5 cents per mile)
- 16 cents per mile for medical or moving purposes (down from 17 cents per mile; only for active duty military, due to the Tax Cuts and Jobs Act), and
- 14 cents per mile driven in service of charitable organizations (unchanged).
Time to adapt
It’s safe to say that most companies have been through a lot of changes in the past year, due mainly to the coronavirus pandemic. Employees rapidly switched to remote work. Processes were revamped and digitized. Budgets needed to be reconsidered and shifted.
This lower mileage rate now marks another change – one you’ll want employees to comply with right away.
As you know, a new mileage rate can often spur errors on expense reports, especially during the beginning of the year. And since air travel has largely been grounded, your company’s miles driven may have gone up, potentially leading to even more mileage expenses than normal.
Relay the news
That’s why it’s important for Finance to get the word out ASAP.
To effectively communicate the 2021 standard mileage rate, have your finance team:
- Start with an email blast. Write a clear headline and a concise message that lets employees know the essentials.
- Update other relevant resources. You’ll need to modify the rates and switch the year from 2020 to 2021 on your company intranet, expense report template, T&E policy, etc.