Here’s everything you need to know about employee mileage reimbursement and the mileage reimbursement laws in the United States.
From food delivery drivers to sales associates, there are a lot of jobs that may require you to be behind the wheel of a car for large parts of your workday. And oftentimes, that time behind the wheel is spent in your own car, not a company car.
So who should pay for the gas, maintenance, and miles for your personal vehicle that’s being used for work, you or your employer? The answer largely depends on who you work for and where you live. Here’s everything you need to know about employee mileage reimbursement and mileage reimbursement laws in the United States.
There Is No Federal Law Requireming Mileage Reimbursement
Unfortunately, there is no federal law requiring private businesses in the United States to reimburse employees for mileage or other vehicle-related expenses. Federal mileage reimbursement laws might be a reality someday in America, but unfortunately, not today.
Avoid Jobs Where The Salary And Mileage Reimbursement Policies Cripple Your Salary
Before you take a job that will require you to drive in your own car on a regular basis, make sure you estimate your average annual car-related expenses. Gas, maintenance and the impact on your lease or auto financing plan should all be considered. A job that requires a lot of driving might end up costing you -$5,000+ per year out of your pocket. Here’s why…
- Annual Miles: Some sales jobs might require you to drive 25+ miles per day, not including the miles in your daily commute. The average commute in the United States is about 42 miles per day. Considering there are usually 260 workdays per year, you might put 18,000-24,000 miles per year on to your car. Keep in mind that most auto leases make you pay about $0.20 per mile for anything over 10,000 miles per year. At a $0.20 per mile penalty, you’ll end up paying a $2,000 fine for every 10,000 miles you drive over your lease.
- Gas: Nationally, the average price per gallon of regular gasoline is about $2.55. Using the average MPG of 22 for most vehicles in the United States, that means that you’ll probably spend between $2,000 – $3,000+ per year on gasoline.
- Maintenance: According to AAA, the average annual maintenance cost for a car is about $1,200.
Some States Require Mileage Reimbursement, But Not All
In some states, like California, employers are required to reimburse their employees for some vehicle-related expenses, like mileage, incurred on the job.
Government Employers Are Often Required To Reimburse Mileage
For the most part, it’s largely optional for private companies to offer vehicle usage reimbursement unless required by state law. However, if you work for either a state or federal government organization, then you’re probably entitled to milage reimbursement anytime t=yiou use your personal vehicle for work. Even super-conservative Utah has a mileage reimbursement program for state employees.
But make sure you read the fine print. Each state will have its own conditions. For example, in Illinois, state employees must submit their mileage reimbursement request within 30 days, otherwise, their reimbursement is invalid.
Federal Labor Laws Prevent Employers From Withholding Vehicle Reimbursements If Your Vehicle Expenses Push You Below Federal Minimum Wadge
Even if the state where you live doesn’t mandate mileage reimbursement, the federal Department Of Labor might be able to help you. It’s against the law to force employees to absorb the burden of operating a vehicle for work-related purposes if it reduces their income beyond federal minimums.
“Wages must be paid free and clear of impermissible deductions – such as the costs of operating the vehicle or traveling on the road – that would reduce pay below the federal minimum.” ~ Department Of Labor
So if you are only making minimum wage, or close to it, and using your personal vehicle for work, then you should either get a raise or be able to submit vehicle expenses.
Mileage Reimbursement And Mileage Deduction Are Not The Same Things
Before you storm into HR demanding to be paid back for personal vehicle-related expenses, make sure you fully understand the difference between mileage reimbursement and mileage deduction.
- Mileage reimbursement is when an employer or client pays you a specific rate for the miles that you drive.
- Mileage deduction is when you take a tax write-off for the miles that you drive in a year on your annual tax return. This was a common tax write-off until it was eliminated from tax law in 2018.
Commuter Miles Are Very, Very Rarely Reimbursed By Employers
Getting reimbursed for using your vehicle for work is one thing. But what about your daily drive to and from work?
But what if you could get paid back from your employer for every mile you drove to and from work? From an employee perspective, getting reimbursed for commuter miles sure sounds like a great idea. Just imagine making $0.50 or more per mile. In states with the longest average daily commute, 45 miles and over, like New Hampshire, Texas and Georgia, you’d generate $20+ per day in mileage reimbursements.
Unfortunately finding an employer that offers mileage reimbursement for commuter miles will be extremely difficult. It’s neither a requirement or a law from either the federal government or any US state. As a result, the overwhelming majority of employers will not offer any reimbursement for your commute.
So consider yourself extremely lucky if you ever find an employer that offers to pay for your commuter miles, office parking or even mass transit pass. They are not easy to find.
NERD NOTE: Commuting times will vary from city to city, but according to the U.S. Census Bureau, the average American spends about 54 minutes commuting per day. That’s 26.9 minutes each way and about nine days, or 200+ hours, per year.
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Frank Wilson is a retired teacher with over 30 years of combined experience in the education, small business technology, and real estate business. He now blogs as a hobby and spends most days tinkering with old computers. Wilson is passionate about tech, enjoys fishing, and loves drinking beer.