New mileage rates: regulations will also apply to electric vehicles

Work is underway on a new regulation by the Minister of Infrastructure, which will update the rules for reimbursing the costs of using a private vehicle for business purposes (known as mileage rates). The planned changes will not only increase the rates but will also introduce clear guidelines for electric, hybrid, and hydrogen vehicles. This has previously been lacking, resulting in real disadvantages for users of “green vehicles.”

What is mileage reimbursement?

Employees using a private car, motorcycle, or moped for business purposes are entitled to reimbursement of their costs. This applies to both local and out-of-town trips, including those undertaken as part of a business trip. The reimbursement is usually settled based on a mileage rate, calculated as the number of kilometers driven (as recorded in the travel log) multiplied by the official rate per kilometer, unless the employer applies more favorable terms. For local trips, the calculation can also be based on a monthly limit for local travel, determined by the number of inhabitants in the city where the employee works.

As a rule, this reimbursement is treated as additional income for the employee, exempt from social security contributions. If the reimbursement is part of a business trip settlement and falls within the mileage rate limits, it is exempt from personal income tax (PIT) under Article 21, Section 1, Point 16(a) of the PIT Act, with any excess over the mileage limit subject to taxation. The reference to mileage rate limits or a lump-sum payment also affects the deductible business expenses for the employer.

Current issues with mileage rates

The current method of determining mileage rates is based on the Ministry of Infrastructure’s regulation from March 25, 2002, and its subsequent amendments. The mileage rates are based on the engine capacity and the type of vehicle. Since January 2023, the rates have not been updated or adjusted to reflect market prices. Currently, the rates per kilometer cannot exceed:

• 0.89 PLN per kilometer for a passenger car with an engine capacity up to 900 cm³, and 1.15 PLN per kilometer for a car with an engine capacity above 900 cm³,
• 0.69 PLN per kilometer for a motorcycle,
• 0.42 PLN per kilometer for a moped.

The regulations did not specify any rates for electric, hybrid, or hydrogen vehicles. This gap led to significant interpretative uncertainties and a lack of clarity on how to settle the operating costs of such vehicles.

The Director of the National Tax Information Service, in issuing individual tax rulings, has taken inconsistent positions on the reimbursement of costs for the use of such vehicles for business purposes. Specifically, it was noted that:

• A lower rate applicable to cars with an engine capacity up to 900 cm³ might be used (e.g., individual tax ruling from November 17, 2021, 0114-KDIP3-2.4011.437.2021.1.MT),
• Another ruling indicated that, for electric vehicles, the mileage rate limit does not apply at all, and the cost reimbursement may be fully exempt from PIT (individual tax ruling from May 11, 2023, 0115-KDIT2.4011.99.2023.1.ENB).

These issues were further complicated by a response from the Deputy Minister of Finance on July 18, 2025, stating that the reimbursement is not exempt and is fully subject to PIT taxation. The lack of clear regulations and the conflicting positions of the authorities made the proper settlement of expenses for low-emission vehicles difficult and prone to challenges by tax authorities.

New rules – new rates, new classification

The proposed regulations not only foresee increased amounts but also a change in the criteria for determining the rate. The regulation suggests replacing engine capacity with the type of drive and its power. This approach aims to better reflect the actual operating costs of different types of vehicles.

The new mileage rate for passenger cars will be:

• 1.04 PLN or 1.34 PLN per kilometer for internal combustion cars (depending on whether the maximum engine power exceeds 75 kW),
• 0.83 PLN or 1.10 PLN per kilometer for hybrids (also depending on whether the maximum engine power exceeds 75 kW),
• 0.60 PLN per kilometer for electric and hydrogen cars.

Mileage rates for motorcycles and mopeds will also be updated:

• 0.75 PLN per kilometer for internal combustion motorcycles,
• 0.35 PLN per kilometer for electric motorcycles,
• 0.45 PLN per kilometer for internal combustion mopeds,
• 0.20 PLN per kilometer for electric mopeds.

The rates for vehicles with alternative drives are clearly lower than those for their internal combustion counterparts. The Ministry of Infrastructure justifies this by the lower operating costs, simpler design, and less wear on parts.

The change will require process adjustments

The new rates and criteria for settlements are also a signal for HR and accounting departments. If the planned changes come into force, employers will need to:

• Update documentation templates (vehicle mileage records, agreements with employees for using private vehicles for business purposes),
• Adjust settlement systems, and
• Communicate appropriately with employees.

Current status of the amendment

The draft regulation (UD18) has already been considered by the Standing Committee of the Council of Ministers and should soon be presented to the Sejm. While amendments are still possible, the main direction of the changes seems to be decided. Increased rates, more differentiation, and the inclusion of alternative drives are the key elements.

It is worth starting to act even before the new regulations come into force. For employers, this is the time to reconsider the settlement method and secure the interests of the company and employees. For employees, it is an opportunity to establish clear rules for those using newer and less-emitting means of transportation.

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[1] Act of 26 July 1991 on personal income tax (consolidated text: Journal of Laws of 2025, item 163, as amended).
[2] Regulation of the Minister of Infrastructure of 25 March 2002 on the conditions for determining and reimbursing the costs of using passenger cars, motorcycles and mopeds not owned by the employer for business purposes (consolidated text: Journal of Laws of 2002, No. 27, item 271, as amended).