Mileage Reimbursement Requirements By State

Dimitri Gedevanishvili

Dimitri Gedevanishvili

Marketing Manager
irs mileage requirements by state

Mileage reimbursement requirements can be an intimidating topic for many companies, whether at the small business or enterprise scale. It’s important to know when you are required to reimburse as regulations can vary from state to state.

In this article, we will discuss what the United States requires at the federal level in regard to mileage reimbursement, and what some states are doing at the local level. With that said, always consult your state’s local laws when making decisions that could affect your business.

Federal Mileage Reimbursement Requirements

In the United States, there is no federal mandate requiring companies to reimburse their employees for mileage and travel expenses. In most states, if an employer requires workers to use their personal vehicles for business purposes, they technically can do so without any promise of reimbursement.

The exception to this rule is if the expenses will cause an employee to earn less than minimum wage. Let’s say that you had an employee go pick up some paper from a nearby office supply store.

Related: What To Do If You Forget To Track Your Mileage

If that employee is paid minimum wage, their driving-related expenses may result in them pocketing less than minimum wage. Should that be the case, you are required by federal law to reimburse them for those expenses that would cause their net pay to dip below minimum wage.

Note: These reimbursement requirements don’t count for expenses such as commuting to and from work.

Thus, using a robust mileage and expense tracker in this type of scenario is paramount. That’s why we designed TripLog from the ground up to be the last app your company will need when reimbursing mileage.

irs mileage rate requirements in the usa

You Could Avoid Reimbursing… But You Probably Shouldn’t.

Most companies in the US will reimburse their employees to some extent, even those earning well above minimum wage. This is a decision one must make as a business owner or manager, taking into account certain somewhat intangible factors such as employee happiness and what the company is able to afford.

For instance, having an IRS-compliant expense reimbursement plan might help your company attract better, more highly-qualified employees. This may save your company additional money in the long run, despite costing you more in the short term.

If you feel as though you need a detailed and easy-to-understand mileage and expense reimbursement manager, TripLog will be your best friend.

Does My State Require Mileage Reimbursement?

As of 2022, only three states require by law that companies reimburse mileage for their employees – California, Illinois, and Massachusetts. Other states and jurisdictions like Iowa, Montana, New York, Pennsylvania, and Washington, D.C. may require companies to reimburse for certain other expenses, but not necessarily mileage.

Related: Fixed and Variable Rate (FAVR) Reimbursement Explained

Another potential complication is the fact that some of those other states may offer mileage reimbursement for state-level government employees. As always, if you’re unsure of what your state or jurisdiction requires to reimburse you, look into your local laws. You could also ask a tax professional or your HR representative for additional assistance.

What Does This Mean for CA, IL, and MA?

If you own a business in any of those three states (California, Illinois, and Massachusetts), you are obligated to reimburse your employees for many expenses that they incur on behalf of your company. One of these expenses is mileage. It’s important for you and your business to keep accurate records of the expenses that your employees accrue.

Track Your Mileage and Expenses With Ease

Understanding which states or jurisdictions require mileage reimbursement is important. Even if you don’t live in a state that requires it, companies should still track their employee’s mileage. It can be a solid method of hiring high-quality employees and keeping them happy.

Fortunately, there are many great tools at your disposal, and an indispensable member of your financial arsenal should be TripLog. Our mileage and expense tracker is as robust and powerful as it is easy to use.

If you want to easily see how much you can save, check out our mileage reimbursement calculator. To learn more, schedule a complimentary live web demo, or visit our pricing page to get started today.

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Mileage Reimbursement Savings Calculator

Using outdated manual mileage logs can cost businesses thousands of dollars per year in lost time and incorrect reimbursements. See how much TripLog can help you save!

Number of drivers

Average miles daily per person​

Number of trips daily

Cents-per-mile

Annual mileage reimbursement costs based on the numbers you provided.

Annual Mileage Reimbursement

50 mi/day x 100 drivers x $0.54 (5 days x 50 wks)

$675,000

This is the inline help tip! You can explain to your users what this section of your web app is about.

According to research, on average employees inflate the mileage by 25% when self reported.

Estimated Reimbursement Savings

25% x Annual Mileage Reimbursement

$168,750

People on average spend 2 minutes on manually recording trips.

Manual Entry Hours

2 mins x 10 trips/day x 100 drivers (5 days x 50 wks)

8,334 hr

Taking national average $25 hourly rate.

Estimated Labor Savings

Avg. $25/hr x Manual Entry Hours

$208,334

Your Company

could save

(Labor Savings + Reimbursement Savings) / Number of Drivers

$4,167

per driver