What is an expense policy?
An expense policy is the rulebook for what a company will pay back and how. This cheat sheet covers how to think about one and the five steps to write it. The detail is further down.
How to think about it
- The company decides what's reimbursable. The IRS decides what's deductible for tax purposes. The two lists don't always match.
- Specific beats broad. A rule that says "airline tickets" is broad. Economy airfare up to $600 for a domestic flight is specific.
- Tax rules shape the reimbursement side. Under an IRS accountable plan, reimbursements need a business connection, adequate accounting and the return of any excess to stay off the employee's pay.
- Rules checked at booking stop spend earlier. A policy reviewed after the trip finds exceptions after the money is spent. Rules applied in the booking flow can stop them first.
How to write one
- Define eligible expensesUsually airfare, hotel stays, ground transport, meals and incidentals like parking or Wi-Fi. List the exclusions too, such as personal entertainment or parking tickets.
- Set limitsGive each category a clear cap, and tell employees how to ask a manager when they can't stay within it.
- Set documentation rulesSay which receipts are required and what proof is accepted for small items like coffee or Wi-Fi.
- Set submission and approvalName the deadline, how to submit and who reviews and approves reports.
- Set payment timingSay how and when employees are paid back, such as a set number of days after submission, by direct deposit or check.
How it works on Engine
Engine applies the booking side of a policy. Admins set rules in Controls > Travel Policies, including lodging rate caps and star-rating floors, flight cost and cabin-class limits and daily rental-car caps. For each rule they pick Not Allowed, Allowed with Reason or Allowed with Approval, and assign the policy to all members, individual members or selected departments. Rules are checked during search, selection and checkout.
Questions
What should an expense policy include?
Which expenses are eligible and which are excluded, spending limits by category, receipt and documentation rules, how and when to submit and who approves, and how and when employees are reimbursed.
Is an expense policy the same as a travel policy?
Many companies combine them into one travel and expense (T&E) policy that spells out what counts as a reimbursable travel expense, how to book a business trip and which costs are off-limits.
What receipt threshold should an expense policy set?
Many published policies use $75, which matches the IRS rule. Lodging needs a receipt at any amount, and most other expenses need one at $75 or more. For small items like coffee or Wi-Fi, some policies waive receipts or accept a card statement.
Should an expense policy use per diem or actual costs for meals?
Either works. Some companies give a per diem, a daily spending limit, while others reimburse actual meal costs with receipts.
Sources
- Engine, Best practices for crafting an expense reimbursement policy, accessed November 2, 2026.
- Engine, A complete guide to travel and expense process management, accessed November 2, 2026.
- Engine, Travel Expense Policy Guide: How to Control Costs, Enforce Compliance, and Eliminate the Receipt Chase, accessed November 2, 2026.
- Engine, Business Travel Expense Report Template (Free), accessed November 2, 2026.
- Internal Revenue Service, Publication 463 (2025), Travel, Gift, and Car Expenses, accessed November 2, 2026.
- Engine, Company Travel Policy Enforcement, accessed November 2, 2026.