Originally Posted by
Often1
Analogies never work.
The reason that it is taxable income is because that is what, for those who are US taxpayers, US tax law provides.
Running around saying that X is like Y doesn't matter if X is not income and Y is.
Adding on to this, the tax code around mileage reimbursement indicates that the standard mileage rate is intended to be a catch-all, covering all expenses associated with "owning" and operating your personal vehicle for business purposes - much in the same way that you have a choice between itemizing your deductions or taking the "standard deduction". One of the factors in the reimbursement is depreciation of the vehicle. Since you don't own the vehicle, you can't depreciate it. In the case of a rental, the owner of the vehicle (Hertz/Avis/whoever) is already deducting the depreciation. It is also true that you can't take standard mileage for a borrowed car for the same reason. You can, however, deduct the actual cost of the rental.
I am sure that many will say "Well, *MY* company allows it!", but the answer is probably not. If they are reimbursing you at IRS rates, then they are most likely deducting that on *THEIR* taxes, so they are subject to the same rules. If they are paying more than the standard mileage rate, then they would have to report the excess as taxable income.