The 2019 IRS standard mileage rate was announced today as $0.58. Next year’s rate increased 3.5 cents from the 2018 rate. Also referred to as the IRS Safe Harbor Rate, the IRS mileage reimbursement rate and IRS business mileage standard, the IRS standard mileage rate takes into account this year’s rise in vehicle costs and gas prices.
The rate is:
It is not:
There are a number of ways, but the companies that will be most impacted are those that use the IRS rate or other cents-per-mile options as their reimbursement method.
Companies that aren’t what one would call “on top of the news” might face this problem. With everything on a company’s plate, prioritization can be difficult. But this change is something that companies should prioritize, given the repercussions of ignoring it.
Companies may start hearing complaints from mobile workers about their reimbursement not being enough. They may also start seeing their drivers making fewer trips. A workplace with low morale is rarely a productive one. What’s more, under reimbursements may result in a lawsuit.
This generally depends on the state a company’s workers are driving in. California and Illinois have strong labor laws that protect employees from under reimbursement. If a court of law finds a company guilty of violating labor laws, they may be paying out serious money to disgruntled employees.
Companies taking a proactive approach to variables in their industry will adjust appropriately. Upon finding out about the new rate, they will make arrangements to change their current cents-per-mile rate program. When the new year comes around, their mobile employees will receive the appropriate reimbursement for their mileage.
Unfortunately, organizational costs will also go up by a small percentage. And that doesn’t sound like a lot, but mileage is a top 10 business expense. 100 employees driving 10,000 miles per year gives the company a change of $35,000 this year that they didn’t plan for. And that’s enough for any company to reconsider their vehicle program.
Companies that see the costs associated with the cost of ignoring the new rate and adjusting to it have the option to move to a new vehicle program. Different vehicle programs can offer a reimbursement designed for people who drive regularly for business. They can be updated easily and account for variables on a month to month basis. Additionally, they can provide reimbursement beyond the cents-per-mile cost of driving a personal vehicle for work.
This post has hopefully helped you understand the 2019 IRS standard mileage rate and its impact on your company. But this is far from an easy topic and you may still have questions. If you do, reach out to us. We advise the IRS on the yearly rate, providing data to help them reach their number. If you’re looking to adjust your current vehicle program, or maybe explore your options, contact us!