Employer Doesn’t Reimburse Mileage or Pays Less Than the CRA/IRS Rate? What You Can Do (2026)
If your employer doesn’t reimburse mileage, or pays less than the CRA or IRS rate, your options depend on which side of the border you work. In Canada you can often claim your actual vehicle costs on your tax return if your employer signs Form T2200. In the US, a W-2 employee can’t deduct unreimbursed mileage in 2026, so the lever is asking your employer to cover it. Either way, a trip-by-trip log is what makes the claim or the ask hold up.
Updated November 3, 2026.
Drive your own car for work? Fuelshine logs every work drive automatically, so you have the records for either route. Free to start on iPhone and Android, no credit card needed.
Is it a problem if my employer pays less than the CRA or IRS rate?
Usually not for the employer. The CRA’s 2026 rates are 73¢ a km for the first 5,000 km and 67¢ after that. The IRS business rate was 72.5¢ a mile to June 30 and 76¢ from July 1. Those are the most an employer can pay tax-free per kilometre or mile. They are not what an employer has to pay. Paying less is allowed. Paying more can make the extra taxable or raise tax questions.
Whether your employer must reimburse you at all depends on where you work. For the rules by state and province, see Do I have to reimburse employees for mileage?.
Your employer doesn’t reimburse mileage: what do you actually get?
Start with what lands in your pay. The answer changes what you can do.
What your employer pays | Canada | United States |
Nothing | You may be able to claim a work share of your actual vehicle costs on Form T777, if your employer signs a T2200. | No federal deduction for W-2 employees in 2026. Ask your employer to cover it. |
A per-km or per-mile rate below the CRA or IRS rate | A tax-free per-km allowance usually rules out a vehicle claim. If your real costs are higher, you can choose to add the allowance to your income and claim your costs, with a T2200. | Still tax-free if your records back it up. You can’t deduct the gap on your own return. |
A flat monthly car allowance | Generally taxable income. With a T2200 you may be able to claim your actual costs. | Usually taxable wages, unless it follows a plan that requires mileage records. |
Sources: CRA’s page on line 22900 (other employment expenses) and Guide T4044; Department of Finance Canada’s 2026 rates; IRS Announcement 2026-11 on the mid-year rate; Public Law 119-21, which made the end of the unreimbursed employee expense deduction permanent. More on rates: CRA mileage rate 2026 and the IRS mid-year change.
The math: how big is the gap?
Canada example. Say you drive 10,000 km for work in a year and 5,000 km personally. Your car costs $9,000 a year to run (fuel, insurance, repairs, licence). Your employer pays 40¢ a km.
CRA rate for 10,000 km: (5,000 × $0.73) + (5,000 × $0.67) = $3,650 + $3,350 = $7,000
What your employer pays: 10,000 × $0.40 = $4,000
Gap to the CRA rate: $7,000 − $4,000 = $3,000. That is a number to raise with your employer, not a tax claim.
Your work share of costs: 10,000 ÷ 15,000 = 66.7%, so 66.7% × $9,000 = $6,000
If you claim: add the $4,000 allowance to your income and deduct $6,000 on Form T777. Your taxable income falls by $6,000 − $4,000 = $2,000.
US example. Say you drive 8,000 work miles, 4,000 from January to June and 4,000 from July to December. Your employer pays 50¢ a mile.
IRS rate: (4,000 × $0.725) + (4,000 × $0.76) = $2,900 + $3,040 = $5,940
What your employer pays: 8,000 × $0.50 = $4,000
Gap: $5,940 − $4,000 = $1,940. You can’t deduct it on your return, so the only way to close it is to ask.
These are examples, not predictions. Your numbers depend on your vehicle, your employer’s policy and your province or state. Limits apply to some vehicle costs, such as the cost of the car, so a tax professional can confirm what applies to you.
What you can do in Canada
Ask your employer whether they will complete and sign Form T2200, and keep your copy.
Keep a log all year. The CRA expects the date, destination, purpose and kilometres of each work trip, plus your odometer at the start and end of the year.
Keep your receipts for fuel, insurance, repairs and licence fees.
Work out your work share: work kilometres divided by total kilometres.
Complete Form T777 and enter the total on line 22900 of your return.
What you can do in the US
Ask what your employer’s mileage policy is, and ask for it in writing.
Ask whether they pay mileage against records. Reimbursement at or below the IRS rate is tax-free when the employee provides dates, miles and purpose.
Check your state. Some states require employers to cover necessary work costs. See the state and province guide linked above.
Keep your own log either way, so you can send exact totals each month.
How to ask HR without making it awkward
Keep it short and about the facts. Here is a version you can adapt:
Hi [name], I drive my own car for work about [X] km a month and I log every trip automatically. Could we look at how mileage is reimbursed? I can send the month’s totals in a clean report each month.
And a line you can forward if you want to share how you do it:
I started logging my work drives automatically, and my monthly mileage claim takes about two minutes now. Happy to show you how if it helps others on the team.
If several people on your team drive for work, you’re not the only one with this question, and it is easier to raise together. If your company later wants everyone’s claims in one place, it can set up Fuelshine for Teams. You keep using the same app you already know.
Get your work kilometres logged. Free to start, no credit card needed.
Manager or HR reading this?
If you handle mileage claims for your team and want them in one place, with the rate you choose and reports that match your policy, book a short walk-through.
Employer doesn’t reimburse mileage: common questions
Can employees deduct mileage in Canada and the US?
In Canada, sometimes. If your employer requires you to use your own vehicle, signs Form T2200 and pays no tax-free allowance, you can deduct a work share of your actual vehicle costs on Form T777. In the US, a W-2 employee can’t deduct unreimbursed mileage in 2026, with a few narrow exceptions, so the route is asking your employer to reimburse you.
What can I do if my employer doesn’t reimburse mileage?
Log every work trip, ask your employer what the mileage policy is, and ask for a written rate or plan. In Canada, ask for a signed Form T2200 so you can claim your actual vehicle costs. In the US, ask for a reimbursement plan that pays against your mileage records.
Is my employer allowed to pay less than the CRA or IRS rate?
Yes. The CRA and IRS rates are the most an employer can pay tax-free per kilometre or mile. They are not a minimum. Whether an employer must reimburse at all depends on where you work.
What is Form T2200 and do I need it for mileage?
Form T2200 is the declaration your employer signs to confirm you had to pay your own work expenses. In Canada you need it to claim vehicle costs as an employee on Form T777.
Can I claim the CRA 73 cents per km rate as an employee?
No. The CRA rate is a limit for employer allowances. As an employee you claim a share of your actual vehicle costs, based on work kilometres divided by total kilometres.
Do I need a mileage log either way?
Yes. In Canada your log supports the T777 claim. In the US it is the record an employer needs to reimburse you. Either way, a log made at the time you drive is easier to stand behind than one rebuilt from memory.
What app logs work mileage automatically?
Fuelshine logs every drive automatically, lets you tag each trip Business or Personal, and builds a report you can send your employer. It has the 2026 CRA and IRS rates built in and is free to start on iPhone and Android, with no credit card needed.
This is general information, not tax advice. Check your situation with a tax professional or your employer.
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