Employee Mileage Reimbursement by State (2026)

If you drive for a W-2 job, you live in one of two countries. In four of them — California, Illinois, Massachusetts, and the District of Columbia — your employer is legally required to pay you back for every mile you put on your personal car for work. In the other 47 jurisdictions, federal law has almost nothing to say about it, and you’re often left with one narrow remedy: the FLSA “kickback” rule, which only protects workers at or near minimum wage.

That gap matters more in 2026 than it did a year ago. The One Big Beautiful Bill Act (OBBBA, P.L. 119-21), signed July 4, 2025, made the federal disallowance of unreimbursed employee business expenses permanent. The IRS confirmed in Notice 2026-10 that §70110 of the OBBBA made permanent the disallowance for all miscellaneous itemized deductions — including unreimbursed employee travel expenses. That means almost no W-2 employee can deduct mileage on a federal return anymore — ever again, unless Congress changes course. Your only meaningful remedy is state law, and your only path to using it is a clean, contemporaneous mileage log.

Key takeaways

• The 2026 IRS business mileage rate is 72.5¢ per mile (Notice 2026-10), up 2.5¢ from 2025. This is the safe-harbor reimbursement rate for “accountable plans.”
• Federal law doesn’t generally require employers to reimburse mileage. The FLSA only protects you if unreimbursed costs drop your effective pay below minimum wage (the “kickback” rule under 29 C.F.R. §531.35).
• OBBBA killed the federal deduction permanently. For tax years after 2025, IRC §67(h) (as redesignated) bars unreimbursed-employee-expense deductions for almost everyone. Form 2106 survives only for four narrow groups.
• Four jurisdictions force reimbursement: California (Labor Code §2802), Illinois (820 ILCS 115/9.5), Massachusetts (M.G.L. c. 149 §148), and D.C. (D.C. Code §32-1302 / §32-1308).
• Eight more states give partial protection — typically by capping wage deductions or treating promised reimbursements as recoverable “wage supplements.”
• The action playbook is the same everywhere: read your policy, log every drive, demand in writing, then go to your state labor agency or court.

Section 1 — The federal default: no, your employer doesn’t have to pay you

There is no federal statute that requires a private employer to reimburse a W-2 employee for using a personal car for work. The Fair Labor Standards Act (29 U.S.C. §201 et seq.) is silent on reimbursement as such. What it does require is that wages be paid “free and clear” of expenses incurred for the employer’s benefit.

The FLSA “kickback” rule

Under 29 C.F.R. §531.35, the wage requirements of the Act are not met “where the employee ‘kicks-back’ directly or indirectly to the employer or to another person for the employer’s benefit the whole or part of the wage delivered to the employee.” Translated: if you’re paid at or near minimum wage and you spend your own money on gas, depreciation, and insurance to do the employer’s work, those costs can’t push your effective hourly wage below the federal minimum.

This theory is the basis for the pizza-delivery-driver cases that have driven most FLSA expense litigation. In Hatmaker v. PJ Ohio, LLC, 2019 WL 5725043 (S.D. Ohio Nov. 5, 2019), the court held that where a delivery driver is paid at or near minimum wage and uses a personal vehicle, the employer must either track actual expenses or reimburse at the IRS standard rate; under-reimbursing creates a minimum-wage violation. Perrin v. Papa John’s International, Inc., 114 F. Supp. 3d 707 (E.D. Mo. 2015), reached the same conclusion. The DOL’s 2020 opinion letter (FLSA2020-12) endorses a “reasonable approximation” of expenses but does not require the IRS rate.

The catch: this theory is useless if you’re paid well above minimum wage. A salaried outside sales rep earning $60,000 with $8,000 of unreimbursed mileage has no FLSA claim. Their effective rate is still nowhere near $7.25/hour.

The post-OBBBA Form 2106 question

Before 2018, employees who couldn’t get reimbursed could at least deduct unreimbursed business expenses on Schedule A as a miscellaneous itemized deduction, subject to the 2%-of-AGI floor. The Tax Cuts and Jobs Act (TCJA) suspended that deduction for 2018–2025. Many advisors planned for it to come back in 2026.

It didn’t. Section 70110 of OBBBA amended IRC §67 to make the suspension permanent. IRC §67(h) (renumbered from (g)) now provides that no miscellaneous itemized deduction shall be allowed for any taxable year beginning after December 31, 2017 — OBBBA simply removed the “and before January 1, 2026” cutoff that TCJA had built in. The deduction is gone for good unless Congress acts.

Form 2106 still exists in 2026, but only four categories of W-2 worker can use it (the §67(b) exceptions preserved under IRC §62(a)(2)):

1. Armed Forces reservists traveling more than 100 miles from home (above-the-line under §62(a)(2)(E)).
2. Qualified performing artists (§62(a)(2)(B)).
3. Fee-basis state or local government officials (§62(a)(2)(C)).
4. Employees with impairment-related work expenses (§67(b)(6) exception).

If you don’t fit one of these four, your only tax-side benefit for 2026 mileage comes from your employer reimbursing you under an accountable plan.

Armed Forces moving miles

One narrow federal mileage benefit survives. IRC §217(g) lets active-duty military members deduct moving expenses (including miles driven) when relocating pursuant to a military order. The 2026 moving rate is 20.5¢ per mile (Notice 2026-10). OBBBA §70113(b) expanded the exception to include certain members of the intelligence community who move after December 31, 2025, pursuant to a change of assignment which requires relocation.

For everyone else, the moving deduction is gone.

Section 2 — The four jurisdictions that force reimbursement

California — Labor Code §2802

California is the most protective state in the country and the subject of its own dedicated pillar on this site. The short version: Labor Code §2802 requires employers to indemnify employees for all necessary expenditures or losses incurred in direct consequence of the discharge of duties. The statute is strict liability, allows attorneys’ fees, has a three-year statute of limitations, and (under Cochran v. Schwan’s Home Service) requires “reasonable percentage” reimbursement of expenses even when employees would have incurred them anyway. For the full California treatment — including the Gattuso identifiability rule for lump-sum payments and how to file a Labor Commissioner claim — see our California Mileage Reimbursement (2026) pillar.

Illinois — 820 ILCS 115/9.5

Illinois is the most aggressive non-California statute. Governor Bruce Rauner signed Public Act 100-1094 (Senate Bill 2999) on August 26, 2018, adding Section 9.5 to the Illinois Wage Payment and Collection Act effective January 1, 2019:

“An employer shall reimburse an employee for all necessary expenditures or losses incurred by the employee within the employee’s scope of employment and directly related to services performed for the employer.”

The statute defines “necessary expenditures” as “all reasonable expenditures or losses required of the employee in the discharge of employment duties and that inure to the primary benefit of the employer.”

Three Illinois-specific wrinkles to know:

1. 30-day submission rule. The employee “shall submit any necessary expenditure with appropriate supporting documentation within 30 calendar days after incurring the expense.” (820 ILCS 115/9.5(c).) Miss the window and the employer can deny — though the employer can extend the deadline in its written policy.
2. Written-policy ceiling. Unlike California, Illinois lets employers cap reimbursable amounts through a written expense-reimbursement policy provided to the employee. The employer is not liable for any portion of the expenditure exceeding what the policy allows, provided the policy doesn’t set the cap so low as to effectively eliminate the right.
3. Strong remedies. Under §14, prevailing employees recover 5% of the underpayment per month that it stays unpaid (raised from 2% by P.A. 102-50, effective July 9, 2021), plus mandatory attorneys’ fees and costs. A claim must be filed within one year of when the wages or expenses were due. The Illinois Department of Labor can also adjudicate claims administratively.

A salaried sales rep with $11,000 in unreimbursed mileage who waits 18 months to sue is looking at $11,000 + (18 × 5% × $11,000) = roughly $21,000, plus attorneys’ fees. Illinois is a serious statute.

Massachusetts — Wage Act, M.G.L. c. 149 §148

Massachusetts has no separate mileage-reimbursement statute. Instead, courts have interpreted the Massachusetts Wage Act broadly to cover unreimbursed business expenses. The leading authority is Awuah v. Coverall North America, Inc., 460 Mass. 484 (2011), in which the SJC held that employer-required costs that “should have been borne by the employer” cannot be shifted to workers and are recoverable as damages incurred under §150. Combined with the regulation at 454 CMR 27.04(4), which requires reimbursement of transportation expenses when an employee is required or directed to travel from one place to another after the beginning of or before the close of the work day, and Camara v. Attorney General, 458 Mass. 756 (2011), which forbids employer setoffs without a clear and established debt, mileage shortfalls are squarely within the Wage Act.

The penalty regime is the harshest in the country. Under M.G.L. c. 149 §150, a prevailing employee shall be awarded treble damages, as liquidated damages, for any lost wages and other benefits, plus attorneys’ fees and costs. Reuter v. City of Methuen, 489 Mass. 465 (2022), made this strict liability: even an employer that pays late but before suit owes triple damages on the full amount. As the SJC put it, the statute leaves no wiggle room.

In a November 11, 2023 Massachusetts Superior Court decision, Associate Justice Lynn Rooney endorsed measuring mileage-reimbursement damages by reference to the IRS standard mileage rate, recognizing the viability of class treatment and ruling that an employee “may reasonably calculate his damages through reference to the IRS mileage reimbursement rates for the relevant periods in lieu of records of his actual transportation expenses.” The decision points the way for mileage-shortfall plaintiffs across the Commonwealth.

One important limit: Devaney v. Zucchini Gold, LLC, 489 Mass. 514 (2022), held that where an overtime claim rests solely on the FLSA, the FLSA preempts Wage Act treble damages. Devaney doesn’t touch mileage claims, which arise independently under state law — but it’s a reminder that the Wage Act is not infinitely elastic.

District of Columbia — D.C. Code §32-1302 et seq

The D.C. Wage Payment and Collection Law was amended by the Wage Theft Prevention Amendment Act of 2014 (D.C. Law 20-157) to define “wages” broadly and to add a treble-damages remedy. Like New York and Delaware (see below), D.C. treats expense reimbursement as a “wage” once an employer agrees to provide it — and the District’s enforcement teeth are sharper than either of those states’.

Under D.C. Code §32-1308(a)(1)(A), a prevailing employee is entitled to the payment of any back wages unlawfully withheld; liquidated damages equal to treble the amount of unpaid wages; statutory penalties; and such legal or equitable relief as may be appropriate. Attorneys’ fees and costs are mandatory.

The D.C. Office of the Attorney General has used the Act aggressively. Since AG Brian L. Schwalb took office in January 2023, the office has secured more than $23 million for workers and the District, including a $3 million May 2024 settlement against gig-economy firm Arise Virtual Solutions, Inc. for misclassifying at-home customer-service workers as independent contractors and failing to pay minimum wages and overtime.

D.C. doesn’t have a stand-alone “reimbursement” statute on the model of §2802, but the wage definition plus treble damages plus AG enforcement plus a $17.95/hour minimum wage (effective July 1, 2025; rising to $18.40 on July 1, 2026) make it functionally one of the strongest jurisdictions in the country.

Section 3 — Partial-protection states

These states have something — a wage-deduction statute, an indemnification provision, or case law interpreting “wages” to include promised reimbursements. None are as strong as the Big Four, but each gives an employee real leverage.

A few of these deserve a closer look:

• New Hampshire (RSA 275:57). One of the oldest statutes in the country, often overlooked. If your employer asked you to drive and you submitted proof of payment, they must reimburse within 30 days. Willful violations carry a $1,000 civil penalty per violation plus interest. Enforcement runs through the New Hampshire Department of Labor under RSA 275:51.
• Iowa (§91A.3(6) + §91A.8). Iowa Code §91A.3(6) requires authorized expenses to be reimbursed in advance of expenditure or within 30 days after the employee’s submission of an expense claim. If the employer “intentionally” fails to pay, §91A.8 adds liquidated damages calculated under §91A.2(6) at 5% of the unpaid amount per day (excluding Sundays/holidays/first 7 days), capped at 100%, plus attorneys’ fees. The “intentional” requirement is a hurdle, but the damages are real.
• New York (Labor Law §198-c). New York has no general mileage statute, but §198-c criminalizes the failure to pay benefits or wage supplements within 30 days of when due — and benefits or wage supplements explicitly include reimbursement for expenses. Once your employer promises mileage reimbursement (in a handbook, offer letter, or established practice), that promise is enforceable as wages, with a six-year statute of limitations and up to 100% liquidated damages under §198. The criminal-misdemeanor teeth don’t reach executives, administrators, and professionals earning more than $1,300 per week.
• North and South Dakota. Both states have California §2802-style indemnification language on the books. Both are rarely litigated. If you live there and your employer isn’t paying, the statute is on your side — but expect a slow, lonely path to recovery.
• Pennsylvania. No mandatory-reimbursement statute. PA’s Minimum Wage Act provides the same kickback-style protection as the FLSA, and the Wage Payment and Collection Law enforces promised reimbursements. If your handbook says we reimburse mileage at the IRS rate, PA will enforce that promise. If it says nothing, you’re out of luck.

States with essentially no protection

Most states — including Texas, Florida, Georgia, Ohio, North Carolina, Tennessee, Arizona, Virginia, Washington (outside Seattle), and many others — have no statute requiring private employers to reimburse mileage. Your only avenue is (a) the FLSA kickback theory if you’re at or near minimum wage, or (b) a breach-of-contract theory if your employer promised reimbursement and didn’t deliver.

Section 4 — The federal “accountable plan” rules

If your employer does reimburse mileage, the federal rules that determine whether that money is taxable income or not come from IRC §62(c) and Treas. Reg. §1.62-2. They define two categories.

Accountable plan. Three requirements:

1. Business connection. The expense must be a deductible business expense the employee paid or incurred in performing services for the employer.
2. Substantiation within a reasonable time. The IRS’s fixed-date safe harbor under Treas. Reg. §1.62-2(g)(2)(i) deems substantiation within 60 days of incurring the expense to be timely. Substantiation under §274(d) requires date, mileage, business purpose, and location for every trip — exactly the data a contemporaneous mileage log captures.
3. Return of excess within a reasonable time. Advances must be returned within 120 days under the same safe harbor.

Reimbursements paid under an accountable plan are not wages, are not subject to FICA or income-tax withholding, and are not reported on the employee’s W-2.

Non-accountable plan. If the plan fails any of the three tests — most commonly because it pays a flat “car allowance” without substantiation or excess-return mechanics — the reimbursement is wages, included in W-2 box 1, and subject to FICA/FUTA and income-tax withholding. The employee pays employment tax on it and, under OBBBA, can no longer deduct the offsetting expense.

This is the single most common employer failure. A “bundled-into-salary” car allowance, or a flat $400/month vehicle stipend with no mileage tracking, is almost always non-accountable. The employee is paying tax on money that was supposed to cover real costs.

FAVR plans. “Fixed and Variable Rate” plans, governed by Rev. Proc. 2019-46, are an IRS-blessed structure that combines a fixed monthly amount (insurance, depreciation, registration) with a variable cents-per-mile component (gas, maintenance). For 2026, the maximum standard automobile cost a FAVR plan may use is $61,700 (Notice 2026-10, §5). FAVR is more accurate than the flat IRS rate for many roles and is fully accountable.

Section 5 — What to do if your employer isn’t reimbursing you

The action playbook is the same in every state — only the forum changes.

1. Read your employer’s policy. Find it in the handbook, offer letter, or expense-tool documentation. Some employers don’t have a written policy at all, which is itself useful evidence.
2. Document everything contemporaneously. Date, start/end odometer, route, business purpose, client/site. A GPS-based log is the gold standard. Without contemporaneous records, you have no §274(d) substantiation, no FLSA evidence, and no state-law claim worth filing.
3. Submit expenses on time. Under Illinois §9.5, miss the 30-day window and you’re out. Under New Hampshire RSA 275:57, the 30-day reimbursement clock doesn’t start until you submit proof of payment. Put it in writing every month.
4. Send a written demand. Email HR or your supervisor. State the amount owed, the period, the statutory authority, and a deadline. Keep a copy. In Massachusetts, a written demand triggers the Wage Act’s three-month notice clock under §150.
5. Pick a forum.
   • State labor agency. Free, slow, often effective for clear-cut claims. California: Labor Commissioner. Illinois: IDOL. Massachusetts: Office of the Attorney General Fair Labor Division (a private-right-of-action letter is usually required). D.C.: Office of Wage-Hour. New Hampshire: NH DOL.
   • State court. Faster path to attorneys’ fees and treble/liquidated damages. Required in some states (e.g., for fee-shifting in IL).
   • DOL Wage and Hour Division. Only useful if you have an FLSA-kickback theory (you’re at or near minimum wage).
   • Class or collective action. If you’re not alone — and you almost never are — talk to a plaintiff’s-side employment lawyer. Most work on contingency.
6. Mind the statute of limitations. Illinois: 1 year for IDOL, 10 years for breach of contract on written reimbursement policies. California: 3 years (4 with UCL). Massachusetts: 3 years from the violation. New York: 6 years. FLSA: 2 years (3 if willful).
7. Document retaliation. FLSA §215(a)(3) protects against retaliation for FLSA complaints. Every state with a wage-claim statute has an analogous protection (e.g., M.G.L. c. 149 §148A; 820 ILCS 115/14(c)). Save dated copies of communications and adverse-action timing.

A worked example: James, the multi-state outside sales rep

James lives in Chicago. He covers IL, IN, WI, MI, and MN for a Midwest industrial-supply company. His comp: $72,000 base plus a “$400/month vehicle allowance” that shows up bundled into his biweekly direct deposit with no separate line item. His pay stub shows gross wages, period.

In 2026, James drives 22,000 business miles. At the IRS rate of 72.5¢, that’s $15,950 of expense. The “allowance” totals $4,800. James is short $11,150 for the year, all of which he paid out of his own gas, depreciation, insurance, and maintenance.

Federal angle. James can’t deduct any of the shortfall. OBBBA §70110 made the unreimbursed-employee-expense deduction permanently unavailable. Worse, because the $4,800 allowance has no substantiation requirement, no excess-return mechanism, and no separate accounting, it’s a non-accountable plan. The full $4,800 was already included in W-2 box 1 and taxed as wages. James paid federal income tax, FICA, and Illinois income tax on money intended to cover his car costs.

Illinois angle. James lives in Illinois and his work for the employer is “directly related to services performed for the employer.” 820 ILCS 115/9.5 applies. The employer’s defense — “we paid him a $400/month allowance” — is fatally weak for three reasons:

1. No identifiable allocation. The allowance is bundled into salary with no line item on the pay stub. The employee can’t tell what was wages and what was reimbursement.
2. No written policy capping reimbursement. §9.5 lets employers cap amounts through a written expense policy. No policy, no cap.
3. No substantiation mechanism. The employer never asked James for a mileage log, never required submission within 30 days, never reconciled. The “allowance” looks like compensation, not reimbursement.

James’s likely recovery in an Illinois state-court action under §9.5:

• Principal shortfall: $11,150
• §14 damages (5% per month for, say, 18 months until judgment): $10,035
• Mandatory attorneys’ fees: typically $20,000–$60,000+ depending on litigation depth
• Total: roughly $40,000+ on an $11,150 underpayment

This is the same pattern as the Maria example in our California pillar — and it’s not a coincidence. The “bundled lump-sum allowance with no line item and no substantiation” is the single most common employer failure mode in the country.

The fix: a log that wins claims

Every claim in this article — federal kickback, Illinois §9.5, Massachusetts Wage Act, D.C. §32-1308, New York §198-c, Iowa §91A.8, North Dakota §34-02-01 — turns on the same evidence: a contemporaneous, complete mileage log with date, route, mileage, and business purpose. Without it, you have a feeling. With it, you have a case.

EveryLastMile, an iOS mileage tracking app, runs in the background on your iPhone, detects drives automatically using sensor fusion, and stores the log on-device. You classify drives with a swipe. When you need to file a §2802-style claim, submit reimbursement under your employer’s accountable plan, defend a §274(d) substantiation challenge, or compute Armed Forces moving miles for IRC §217(g), the log is already done. Don’t wait until you need a lawyer to start logging — let it run in the background and you’ll have a defensible 12 months of records the next time you push for reimbursement.

If your boss controls your hours, route, and uniform but pays you on a 1099, you may actually be a W-2 employee — and entitled to mileage reimbursement under state law. See the Uber & Lyft Driver Mileage Tax Guide 2026 and the Delivery Driver Mileage Tax Guide 2026 for how classification interacts with what you’re owed. For deeper background, our California Mileage Reimbursement (2026) deep-dive walks through the §2802 mechanics, the 2026 IRS Mileage Rate deep dive covers the 72.5¢ rate, the Commuting Rule explainer settles the home-to-work question, and the Mileage Audit Defense Playbook covers what survives a §274(d) substantiation challenge.

Frequently asked questions

My employer pays a flat $500/month car allowance. Is that reimbursement?

Only if the plan meets Treas. Reg. §1.62-2's three accountable-plan tests (business connection, substantiation within 60 days, excess returned within 120 days). Most flat allowances fail. Check your W-2 box 1: if the allowance is included, the plan is non-accountable and you're being taxed on it.

I'm in Texas. Do I have any recourse if my employer doesn't pay mileage?

Texas has no general reimbursement statute. Your options are (a) FLSA kickback if you're at or near minimum wage; (b) breach of contract if your employer promised reimbursement in writing and didn't deliver; (c) negotiate at the offer or review stage.

Can I still deduct unreimbursed mileage on my federal return in 2026?

Almost certainly not. OBBBA §70110 permanently disallowed miscellaneous itemized deductions, including unreimbursed employee business expenses, for tax years after 2025. Form 2106 is preserved only for Armed Forces reservists, qualified performing artists, fee-basis state/local government officials, and employees with impairment-related work expenses.

Does the IRS standard mileage rate of 72.5¢ apply to me?

The 72.5¢ rate is a safe harbor: if your employer reimburses at or below that rate under an accountable plan, the reimbursement is tax-free. Employers can reimburse above the rate, but the excess is taxable wages. They can also reimburse below — and in most states, that's legal as long as it covers your actual costs.

My employer says reimbursement is included in my salary. Is that legal?

In California and Illinois, this structure faces serious problems. Under California's Gattuso v. Harte-Hanks identifiability rule, the employer must be able to show what portion of salary is reimbursement; if it can't, §2802 is violated. Illinois §9.5 reaches a similar result through the written-policy requirement.

I'm a remote worker. Do mileage rules apply to home-to-office trips?

Generally no. Commuting between your home and a regular work location is not deductible or reimbursable as business mileage. Travel between job sites during the workday, from your home office to a client meeting (if your home is your principal place of business), or to a temporary work location is generally business mileage. See our Commuting Rule explainer linked above for the §280A home-office override.

How long should I keep mileage records?

Federal: at least 3 years from the date you filed the return; 6 years if there's a substantial understatement; indefinitely if no return was filed. For state wage claims, match the longest applicable SOL — 6 years for New York Labor Law claims, 4 years for California unfair-competition claims piggybacked on §2802.

What if my employer retaliates after I demand reimbursement?

You're protected. FLSA §215(a)(3) bars retaliation for FLSA-based complaints; every state with a wage statute has an analog (e.g., M.G.L. c. 149 §148A, 820 ILCS 115/14(c), NY Labor Law §215). Document the timeline of your demand and any adverse action immediately. Retaliation claims often carry their own remedies on top of the underlying wage claim.