Are expense reimbursements taxable?

Under an accountable plan, no — reimbursements are not taxable to the employee and are not reported on the W-2. Under a non-accountable plan (or if the accountable plan rules are not met), reimbursements are treated as taxable wages subject to income and payroll taxes.

Do I need receipts for every expense?

Under the IRS's accountable plan rules, expenses of $75 or more require receipts. For expenses under $75 (except lodging, which always requires a receipt), a written record of the amount, date, place, and business purpose is sufficient. Many companies require receipts for all expenses as a best practice.

Expense Reimbursement Form (Free Template)

TL;DR — Quick Answer

An expense reimbursement form documents business expenses employees paid out of pocket. To keep reimbursements tax-free, your company must follow IRS accountable plan rules: business connection, substantiation within 60 days, and return of excess within 120 days.

2026 IRS mileage rate: $0.70 per mile
Receipts required for expenses of $75 or more
Accountable plan reimbursements are not taxable income

$0.70

2026 Mileage Rate

Per business mile

60 days

Substantiation Deadline

After expense is incurred

$75

Receipt Threshold

Receipts required above this

IRS Accountable Plan Rules

The IRS defines an accountable plan as a reimbursement arrangement meeting three requirements:

Business Connection

The expense must be incurred in connection with the employer's business. Personal expenses do not qualify.

Adequate Substantiation (60 Days)

The employee must substantiate the expense — including the amount, date, place, and business purpose — within 60 days of incurring it.

Return Excess (120 Days)

If the employee received an advance larger than the actual expense, the excess must be returned within 120 days.

Non-Accountable Plan = Taxable

If your reimbursement plan does not meet all three requirements, it is a non-accountable plan. Reimbursements under a non-accountable plan are treated as taxable wages and must be included on the employee's W-2, subject to income tax and FICA withholding.

Eligible Expenses

Category	Examples	Notes
Travel	Airfare, hotel, rental car, parking	Must be away from tax home overnight
Meals	Business meals with clients/colleagues	Company decides reimbursement amount
Mileage	Business use of personal vehicle	$0.70/mile in 2026
Office Supplies	Paper, ink, shipping	When not provided by employer
Technology	Software subscriptions, equipment	Must be business-related
Professional Development	Conferences, courses, books	Related to employee's role

Receipt Requirements

Under IRS rules, receipts are required for expenses of $75 or more (with the exception of lodging, which always requires a receipt regardless of amount). Each receipt or record must include:

Amount

Total cost of the expense

Date

When the expense was incurred

Location/Vendor

Where or from whom

Business Purpose

Why the expense was necessary

Digital Receipts Are Acceptable

The IRS accepts digital copies of receipts (photos, scans, email confirmations). Encourage employees to photograph receipts immediately — thermal paper receipts fade quickly. Store digital copies securely for the required retention period.

2026 Mileage Rates

Purpose	2026 Rate	2025 Rate
Business miles	$0.70/mile	$0.70/mile
Medical/moving (active military)	$0.21/mile	$0.21/mile
Charitable miles	$0.14/mile	$0.14/mile

The business mileage rate covers all vehicle operating costs: gas, oil, insurance, depreciation, tires, and maintenance. Employees who claim the standard mileage rate cannot also deduct actual vehicle expenses.

Reimbursement Process

Employee Submits Expense Report

The employee completes the expense reimbursement form, attaches receipts, and submits within 60 days of incurring the expense.

Manager Approves

The direct manager reviews expenses for business connection, reasonableness, and policy compliance.

Finance/Payroll Processes

Approved expenses are processed for reimbursement — typically via direct deposit on the next pay cycle or as a separate payment.

Records Retained

All expense reports, receipts, and approvals are filed for the IRS-required retention period (minimum 3 years from the date of the tax return).

Frequently Asked Questions

An accountable plan is an IRS-defined expense reimbursement arrangement where: (1) expenses must have a business connection, (2) employees must substantiate expenses within 60 days, and (3) employees must return excess advances within 120 days. Under an accountable plan, reimbursements are not taxable income.

Under an accountable plan, no — reimbursements are not taxable to the employee and not reported on the W-2. Under a non-accountable plan, reimbursements are treated as taxable wages subject to income and payroll taxes.

The 2026 IRS standard mileage rate for business use of a personal vehicle is $0.70 per mile. This rate covers gas, insurance, depreciation, and maintenance.

Expenses of $75 or more require receipts under IRS accountable plan rules. For expenses under $75 (except lodging), a written record of the amount, date, place, and business purpose is sufficient.