If my employer's mileage reimbursement rate is lower than the irs standard can i deduct the difference?

No, in most cases you cannot deduct the difference if your employer reimburses mileage at a rate lower than the IRS standard mileage rate.

General rule

Under current federal law, unreimbursed employee business expenses are not deductible for tax years 2018 through 2025 due to the Tax Cuts and Jobs Act (TCJA).

That means:

• If your employer reimburses mileage below the IRS standard mileage rate
• You cannot deduct the shortfall on your federal return
• This applies even if the mileage was clearly business-related

So, for a typical W-2 employee:

No deduction is allowed for the difference between your employer’s rate and the IRS standard rate.

Why this deduction is disallowed

Mileage deductions for employees used to fall under miscellaneous itemized deductions, which were:

• Subject to the 2% AGI floor, and
• Suspended entirely through 2025 by the TCJA

Important exceptions

You may deduct unreimbursed mileage only if you fall into one of these IRS-defined categories:

1. Armed Forces reservists
2. Qualified performing artists
3. Fee-basis state or local government officials

If you qualify, the deduction is claimed as an adjustment to income, not an itemized deduction.

Most employees do not qualify for these exceptions.

Self-employed individuals

If you are self-employed (Schedule C, partner, or independent contractor):

• You can deduct business mileage
• You may use the IRS standard mileage rate, even if:
  
  • A client reimburses you at a lower rate
• Any reimbursement received generally reduces your deductible expense

This is not available to W-2 employees.

Employer reimbursements and taxability

• Accountable plan reimbursement
  
  • Not taxable income
  • No deduction allowed for unreimbursed portion
• Nonaccountable plan reimbursement
  
  • Included in W-2 wages
  • Still no mileage deduction allowed

Summary

2026 Updates 

For your 2026 federal return, the IRS Standard Mileage Rate is 72.5 cents per mile. Even if your employer only pays you 50 cents per mile, you cannot claim the 22.5-cent difference.

Permanent Suspension: The OBBBA permanently extended the repeal of "miscellaneous itemized deductions" for employees.

The Educator Exception (New for 2026):  Starting in 2026, eligible educators(K-12 teachers, etc.) can now claim their unreimbursed expenses, including mileage, as a miscellaneous itemized deduction that is not subject to the old 2% floor.

Sources:

• IRS Publication 529 – Miscellaneous Deductions
• IRS Publication 463 – Travel, Gift, and Car Expenses
• IRS Topic No. 510 – Business Use of Car
• IRS Publication 334 – Tax Guide for Small Business