Mileage Reimbursement Policy: Free Template for Canadian & US Businesses (2026)
Updated: 5 days ago
If your employees drive their own cars for work, you need a written mileage reimbursement policy. Without one, employees guess what to submit, managers guess what to approve, and you can end up paying inflated or unsupported claims with nothing on paper to defend them. This guide gives you the 2026 CRA and IRS rates, what a policy must cover, and a free template you can copy today.
Employee who drives for work? Fuelshine logs every work drive automatically and turns it into a reimbursement report you can send your manager, plus an audit-ready mileage log for tax time. Free to start: Get it on Google Play · Download on the App Store
2026 mileage reimbursement rates: CRA and IRS
Government rates set the most you can reimburse tax-free. Pay more and the extra may be taxable to the employee.
Canada (CRA): 73¢ per km for the first 5,000 km a year, 67¢ after that, plus 4¢ per km in the Northwest Territories, Yukon and Nunavut.
United States (IRS): 72.5¢ per mile from January 1 to June 30, 2026, and 76¢ per mile from July 1 to December 31, 2026.
What a mileage reimbursement policy must cover
Who qualifies. All staff who drive for work, or only certain roles. Say whether part-timers and contractors are included.
The rate. The CRA or IRS rate, or your own. If you pay above the government rate, note that the extra may be taxable.
What counts as a business trip. Travel between work sites, client visits, supply runs, training and temporary work locations. Exclude the regular commute and personal errands.
What to log. Date, start and end, business purpose and distance for every trip. A GPS app builds this record for you.
How and when to submit. One method (an exported app report, for example) and one deadline, such as the 5th of the next month.
Who approves. A named manager or finance contact, a turnaround time and a process for questions about a claim.
How long to keep records. CRA asks for six years from the filing date, the IRS for three. Building to the longer period everywhere keeps one policy simple.
Canada vs US: what makes a reimbursement tax-free
CRA treats a per-kilometre allowance as non-taxable when it is based only on business kilometres actually driven, at or below the prescribed rate, with no flat monthly amount mixed in. The logbook needs the date, destination, purpose and kilometres for each trip, plus year-start and year-end odometer readings.
The IRS uses an accountable plan. To keep a reimbursement off an employee's W-2, the plan needs a business connection, substantiation within a reasonable time (a dated log of each trip; reports submitted within 60 days are treated as timely) and return of any excess. If a condition is missed, the payment can be treated as wages.
Free mileage reimbursement policy template (2026)
Copy this and replace the brackets with your details.
Purpose: This policy sets the rules for reimbursing employees who use personal vehicles for approved business travel for [Company Name].
Eligible employees: [All full-time and part-time employees who drive for work, as approved by their manager.]
Rate: Canada: [CRA rate] per km for the first 5,000 km and [lower CRA rate] after. United States: [IRS rate] per mile.
Eligible trips: Client meetings, site visits, travel between offices and other approved business trips. The regular commute is not covered.
Submission: Claims are due within [X] days of the trip using [Fuelshine / expense system], with the date, start, destination, purpose and distance for each trip.
Approval: [Manager / Finance] reviews claims within [X] business days. Approved claims are paid in the next payroll cycle.
Records: Mileage records are kept for [6 years in Canada / 3 years in the US].
Accuracy: Claims must be accurate. Knowingly inaccurate claims may lead to disciplinary action, and [Company Name] may review claims.
Prefer a ready-to-edit Word version? Download the mileage reimbursement policy template (Word, 2026) It has Canada and US wording, a rates table and an acknowledgment page. Employees can keep their records in the free CRA mileage log or IRS mileage log template.
Have employees driving their own cars?
Ready to put this policy into practice? Book a 30-minute demo and see how Fuelshine verifies mileage for your team.
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Frequently asked questions
Is mileage reimbursement mandatory in Canada?
Not by a single federal rule. Employment rules differ by province, and many employers reimburse so employees are not paying to drive for work. If an employer does not reimburse, the employee may be able to claim vehicle expenses on their own tax return. Check your province's rules or ask an employment advisor.
What is the 2026 CRA mileage rate?
For 2026 the CRA automobile allowance rate is 73 cents per kilometre for the first 5,000 km driven for work in a year and 67 cents per kilometre after that. It is 4 cents higher in the Northwest Territories, Nunavut and Yukon.
What is the 2026 IRS mileage rate?
The IRS business rate is 72.5 cents per mile from January 1 to June 30, 2026, and 76 cents per mile from July 1, 2026 (IRS Announcement 2026-11).
Can I reimburse employees above the CRA rate?
Yes, but in Canada the amount above the CRA rate may count as a taxable benefit for the employee. Confirm how to report it with your accountant.
Do I need a mileage log if I use a GPS app?
Yes. A mileage log is what backs up each claim, and a GPS app can build it for you as long as each trip shows the date, start and end, distance and business purpose. A log like this is audit-ready, meaning it has what a reviewer would ask to see.
What happens if an employee loses their mileage log?
A lost paper log can leave claims unsupported and hard to defend if someone asks questions later. An app that stores trips automatically keeps a copy, so the record is not lost with a notebook.
Related guides
This guide is general information, not tax or legal advice. Check with your accountant or the CRA or IRS for your situation.
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