Does your employer have to reimburse you for mileage? Under federal law, only when your unreimbursed driving costs drag your effective pay below the $7.25 minimum wage. A small number of states go further and require reimbursement for all work-related driving no matter what you earn. Everywhere else, if you earn comfortably above minimum wage, your employer has no federal obligation to pay you back, though many do voluntarily at the IRS standard rate of 72.5 cents per mile for 2026.
The Federal Minimum Wage Trigger
The Fair Labor Standards Act does not mention mileage. What it does is require that every nonexempt employee actually take home at least the federal minimum wage for each hour worked, after accounting for expenses the employer effectively shifts onto the worker.1U.S. Department of Labor. WHD Opinion Letter FLSA2020-12 Federal regulations call this the “kickback” rule: when your employer requires you to use your own car for work and does not reimburse the cost, those expenses eat into your wages. If they eat enough to drop your hourly pay below $7.25 in any workweek, the employer has violated the FLSA.2GovInfo. 29 CFR 531.35 – Free and Clear Payment; Kickbacks
Your pay rate determines how much protection this gives you. If you earn well above minimum wage, even heavy driving may not bring your effective hourly rate below $7.25, so the FLSA does nothing for you. If you earn at or near the minimum and drive regularly for work, it takes surprisingly few miles before gas, wear, and insurance create a violation. Delivery drivers and home health aides run into this most often.
The math is straightforward. Say you earn $7.25 per hour and work a 40-hour week, grossing $290. You drive 200 miles for work that week, and your vehicle costs roughly match the IRS rate of 72.5 cents per mile. That is $145 in unreimbursed expenses, dropping your effective earnings to $145, or $3.63 per hour. Your employer would need to reimburse enough to bring you back to $290. The Department of Labor has stated that reimbursement at a rate that “reasonably approximates the expenses incurred” satisfies this obligation, and the IRS mileage rate is widely accepted as a reasonable benchmark.3eCFR. 29 CFR 778.217 – Reimbursement for Expenses
States That Require Reimbursement No Matter What You Earn
A small number of states have laws far more protective than the FLSA. They require employers to reimburse all necessary business expenses, including mileage, regardless of the employee’s pay. The obligation applies to a salaried executive driving to a client meeting just as much as to a part-time worker running errands. The details differ by state, so it is worth checking your state labor agency’s website before assuming anything.
If you work in a state without a mandatory reimbursement law and you earn well above minimum wage, your employer has no legal duty to pay you back for driving. You can still negotiate reimbursement into your compensation, or push for a formal company policy. Many employers reimburse voluntarily because it helps with recruiting, and there are tax advantages to doing it through a proper plan.
What Driving Actually Counts
Your daily commute from home to your regular workplace is personal, not business. The IRS draws this line clearly: driving between your residence and your main place of work is a nondeductible commuting expense no matter how far you drive, and even if you take business calls during the trip.4Internal Revenue Service. Publication 463 – Travel, Gift, and Car Expenses The same distinction applies to reimbursement. Your employer does not owe you for getting to and from the office.
Business mileage is driving you do as part of your job once the workday has started, or driving to a temporary work location instead of your regular office. Common examples:
- Client or customer visits, whether from your office or between multiple client locations.
- Travel to a temporary work site where you expect to work for one year or less.5Internal Revenue Service. Topic No. 511, Business Travel Expenses
- Errands and supply runs on company business, such as picking up materials or making a bank deposit.
- Driving from one company location to another during the workday.
Remote workers get one useful carve-out. If your home is your principal place of business and you drive to another work location in the same trade or business, that drive counts as deductible business travel, not commuting.6Internal Revenue Service. Revenue Ruling 99-7 – Commuting Transportation Expenses If your home office is genuinely your primary workplace and the company occasionally calls you into an office or sends you to meet clients, that mileage is business mileage.
What Rate You Should Expect
Most employers use the IRS standard mileage rate, which for 2026 is 72.5 cents per mile.7Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile That single number is designed to cover gas, insurance, depreciation, maintenance, and repairs together. Tolls and parking fees are reimbursable on top of the per-mile rate. The IRS updates this rate each year based on a study of actual vehicle operating costs, so it moves with fuel prices and repair costs.
Your employer is not required to use the IRS rate. Some companies pay a flat monthly car allowance or a lower per-mile figure. What matters legally is whether the amount, combined with your wages, keeps you at or above minimum wage in states without mandatory reimbursement laws, or whether it covers your actual necessary expenses in states that require full reimbursement.
Whether the Money Is Taxed
A reimbursement that looks generous can shrink once taxes hit it, so how your employer structures the payment matters. The IRS recognizes two categories: accountable plans and nonaccountable plans.
An accountable plan keeps your reimbursement tax-free. To qualify, three conditions must be met: the expenses have a business connection, you substantiate them with adequate records, and you return any amount paid in excess of your actual expenses within a reasonable time.8eCFR. 26 CFR 1.62-2 – Reimbursements and Other Expense Allowance Arrangements When all three are met, the reimbursement is not reported as wages, and neither you nor your employer pays payroll taxes on it.
If any of those conditions is missing, the payment is treated as a nonaccountable plan. Every dollar gets added to your W-2 as wages, subject to income tax withholding, Social Security, and Medicare taxes.8eCFR. 26 CFR 1.62-2 – Reimbursements and Other Expense Allowance Arrangements A flat car allowance with no substantiation requirement is the most common example. You get a set amount each month regardless of how much you drive, and you pay tax on the full amount. That can eat 20 to 30 percent of the allowance depending on your bracket, which is worth keeping in mind when comparing a $500 monthly allowance against a per-mile reimbursement.
If You’re an Independent Contractor
The rules above apply to W-2 employees. If you are classified as an independent contractor, the FLSA’s kickback rule does not cover you, and state expense reimbursement laws typically do not either. The client or platform you work through has no legal obligation to reimburse your mileage.
The tradeoff is that you can deduct business mileage on your own tax return. Independent contractors report vehicle expenses on Schedule C, using either the standard mileage rate of 72.5 cents per mile or the actual expense method.4Internal Revenue Service. Publication 463 – Travel, Gift, and Car Expenses W-2 employees lost that deduction after the 2017 Tax Cuts and Jobs Act suspended unreimbursed employee expense deductions through 2025, though that suspension may change when the law’s provisions begin to expire.
Classification itself matters here. If a company calls you an independent contractor but controls when, where, and how you work, you may actually be an employee entitled to expense reimbursement. Misclassification disputes are common in delivery, rideshare, and home services work.
What to Do If You’re Not Being Paid
Start with a written request. Send your mileage log and a calculation of the total owed to your manager or HR. Reference the company’s reimbursement policy if one exists. If your state requires reimbursement, note that. Put it in email so you have a record of the date and what you asked for.
If the company refuses, and you believe you are legally owed reimbursement, file a wage claim with your state labor agency. In states with mandatory reimbursement laws, the agency can investigate and order the employer to pay. For FLSA violations where unreimbursed expenses pushed your pay below minimum wage, file a complaint with the U.S. Department of Labor’s Wage and Hour Division.
Retaliation is what stops many people. The FLSA makes it illegal for an employer to fire, demote, or otherwise punish you for filing a wage complaint or cooperating with an investigation. That protection applies whether you complained internally or filed with a government agency, and it covers all employees regardless of whether they are individually covered by the FLSA.9U.S. Department of Labor. Fact Sheet 77A – Prohibiting Retaliation Under the Fair Labor Standards Act If your employer retaliates, you can file a separate retaliation complaint or bring a private lawsuit.