Mileage reimbursement is often seen as a cheaper alternative to maintaining a fleet, but in practice, it can quickly spiral into a major hidden expense. For government agencies, universities, and utilities, the costs of reimbursing employees for personal vehicle use often exceed the expense of operating a well-managed motor pool.
In this guide, we’ll explore why mileage reimbursement drains budgets, and how agencies can reduce costs while still providing staff with reliable transportation.
IRS and GSA mileage reimbursement rates for 2025 are over 67 cents per mile. For agencies with employees traveling thousands of miles per month, the costs add up quickly:
10 employees driving 1,000 miles/month = $6,700/month or $80,400/year
Costs increase with fuel prices, wear-and-tear, and mileage rate updates
Beyond financial impact, personal vehicle use also introduces liability risks and limits accountability for vehicle condition, insurance, and safety.
Many organizations fall back on personal mileage reimbursements because:
They lack a motor pool or shared vehicle program
Vehicle scheduling is manual and inconvenient
Leadership believes fleet vehicles are “too expensive”
Staff are resistant to vehicle sharing
But when you dig into the numbers, reimbursing personal mileage often costs more than operating a shared fleet.
Shared vehicles give employees access to reliable transportation without relying on their own cars. Modern motor pool software makes it easy to:
Reserve vehicles online or via mobile
Track usage by department
Capture accurate trip data
Define when employees should use fleet vehicles vs. personal vehicles. For example:
Trips under 30 miles may use personal vehicles
Trips over 30 miles must use fleet vehicles
24/7 access via key kiosks ensures employees don’t default to their own cars after hours.
Collecting utilization metrics helps identify if vehicles are being used efficiently, justifying expansion or redistribution of fleet assets.
Showcase ROI: replacing even 10% of mileage reimbursements with shared fleet use can save tens of thousands annually.
Sonoma County Human Services reduced mileage reimbursement expenses dramatically by introducing a motor pool supported by kiosks and reservation software. Employees gained easy access to vehicles, while the agency saved hundreds of thousands annually.
Personal mileage reimbursement may seem like the easy option, but it’s a budget leak that can be fixed. By launching a motor pool, enforcing policies, and using modern fleet management software, agencies can save money while improving transportation access for employees.