Heard It on the Hotline: Electric Vehicle Mileage Reimbursements and Incentives

Q: Should employees who drive electric vehicles be eligible for the same mileage reimbursement as those who drive gasoline- or diesel-powered vehicles, and how can an employer incentivize employees to consider purchasing an electric vehicle for business or personal use?

A: On December 29, 2022, the IRS issued the standard mileage rate for 2023 and indicated that the same rate applies to electric and hybrid-electric automobiles.

The following was posted on the IRS website:

"Beginning on January 1, 2023, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 65.5 cents per mile driven for business use, up 3 cents from the midyear increase setting the rate for the second half of 2022.
• 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, consistent with the increased midyear rate set for the second half of 2022.
• 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.

These rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles.

The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile."

Therefore, regardless of the type of vehicle the employee is operating, the standard mileage rates can still be applied.

Employers may also consider providing incentives to employees to encourage a move to an electric vehicle for business or personal use. Incentives could include:

• Providing charging stations in the organization’s parking lot to allow employees to charge their electric vehicles at a discounted rate or no cost.
• Offering a bonus to offset the cost of purchasing an electric vehicle. Be sure to consult with payroll and/or accounting regarding tax implications.
• Providing employees with information on charging station locations in the area.
• Hosting a “ride and drive” event day, allowing an electric vehicle dealer onsite to permit employees to view and test-drive electric vehicles. Be sure this does not violate your non-solicitation policy.
• Providing information to employees on the potential cost savings for electric vehicles, including tax incentives, lower fuel bills, and less time spent on service and maintenance.
• Encouraging current employees who own electric vehicles, especially company leaders, to share their experiences.

Promoting and incentivizing electric vehicles for company business and personal use can help further an organization’s sustainability and green initiatives. It can also prove to be a significant cost savings opportunity for the company and its employees.

If you have questions on FMLA protections and obligations, MRA’s 24/7 HR Hotline Advisors are here to help at 866-HR-Hotline (866.474.6854) or email [email protected].