IRS Publication 463

IRS Publication 463 is an official IRS guideline that outlines the rules for deducting business travel expenses and administering tax-free reimbursements.

It serves as a core reference for organizations that reimburse employees for driving, providing detailed guidance on:

• What qualifies as a business expense
• Recordkeeping requirements needed for compliance
• Vehicle expense methods, including mileage-based and actual cost approaches

For mileage reimbursement, Publication 463 defines what counts as business mileage, what information must be recorded for each trip, and how reimbursements can remain tax-free under an accountable plan.

Programs like Fixed and Variable Rate (FAVR) and Cents-Per-Mile (CPM) are built on the principles outlined in Publication 463. While each program applies those rules differently, they all rely on the same underlying definitions and compliance standards.

Understanding Publication 463 helps organizations structure reimbursement programs that are clear, defensible, and aligned with IRS expectations, both in how payments are calculated and how mileage is documented.