Under federal law, usually not. The Fair Labor Standards Act has no rule that says employers must pay for miles you drive on the job. There are two big exceptions. If unpaid driving costs drag your pay below minimum wage, the employer owes the difference. And a handful of states, led by California and Illinois, require employers to cover necessary work expenses, mileage included. If you do get reimbursed, the IRS business rate for 2026 is 72.5 cents a mile through June 30 and 76 cents from July 1. Our Mileage Reimbursement Calculator handles both halves of the year.
Nothing that requires it directly. The FLSA sets the minimum wage and overtime, and that's it. An employer in most states can legally ask you to drive your own car for work and pay nothing extra, as long as one condition holds: after your vehicle costs are taken out, you still earned at least the minimum wage for every hour.
The federal regulation behind that, 29 CFR 531.35, says wages must be paid "free and clear." Costs an employer pushes onto you for its own benefit count against that. Lawyers call it the kickback rule.
A short list of states have laws that make employers pay for necessary job expenses. None of them set a per-mile rate, so the IRS rate isn't mandatory even where reimbursement is. Here's how the rules break down, based on the statutes as cited by employment-law trackers in 2026:
| Where | Law | What it requires |
|---|---|---|
| California | Labor Code §2802 | All necessary expenses from doing the job. The broadest rule in the country |
| Illinois | 820 ILCS 115/9.5 | Necessary expenses within the scope of the job. Claims are generally due within 30 days unless a written policy allows longer |
| Iowa | Iowa Code §91A.3(6) | Authorized expenses, paid in advance or within 30 days of the claim |
| New Hampshire | RSA 275:57 | Expenses the employer asks for, paid within 30 days of proof of payment |
| Montana, North Dakota, South Dakota | MCA 39-2-701, NDCC 34-02-01, SDCL 60-2-1 | Losses and expenses from carrying out job duties, worded much like California's law |
| Massachusetts | 454 CMR 27.04(4) | Narrower. Covers transportation costs for travel between work sites |
| Washington, D.C. | DCMR tools and uniform rules | Narrow. Required tools and uniforms, not general mileage |
Laws change and courts read them differently, so treat this as a starting point. If a lot of money is at stake, your state labor department or an employment lawyer can tell you how the rule is applied where you work.
Most employers that pay use the IRS standard business rate. It's not required, but it's simple and it keeps the payment tax-free. For 2026 the IRS raised the rate partway through the year because of fuel prices, which only happens occasionally. The last midyear change was in 2022.
| Business miles a month | Jan–Jun 2026 (72.5¢) | Jul–Dec 2026 (76¢) | 12 months at 76¢ |
|---|---|---|---|
| 200 | $145.00 | $152.00 | $1,824 |
| 500 | $362.50 | $380.00 | $4,560 |
| 1,000 | $725.00 | $760.00 | $9,120 |
| 1,500 | $1,087.50 | $1,140.00 | $13,680 |
| 2,000 | $1,450.00 | $1,520.00 | $18,240 |
In California, the state Supreme Court has said an employer can use a mileage rate, a flat car allowance, or actual costs, as long as the employee ends up fully covered. If a flat allowance falls short of your real costs, you can claim the gap. For a sense of what your car really costs per mile, try the Car Cost of Ownership Calculator. For gas alone, the Fuel Cost Calculator is quicker.
When you're paid close to the minimum and drive a lot. Take a worker earning $8 an hour for a 40-hour week, which is $320. The federal minimum for that week is $290, so there's only a $30 cushion. If they drive 100 business miles and the cost is valued at the IRS rate of 76 cents, that's $76 of car costs. Their pay drops to $244, or $6.10 an hour, which is under $7.25.
How the car cost gets valued is where the fights happen. The Labor Department's investigator handbook lets its staff use the IRS rate. A later Labor Department opinion letter said employers can use a reasonable estimate of actual costs instead, and in 2024 the Sixth Circuit rejected automatic use of the IRS rate in a delivery-driver case. Pizza and delivery drivers have brought a lot of these suits. The safest assumption for an employer is to track real costs or pay enough to stay clear.
Not if it's paid under what the IRS calls an accountable plan. That means you log the business miles, the date and the purpose, submit them within a reasonable time, and any overpayment gets returned. Paid at or below the IRS rate this way, the money isn't wages and doesn't show up as income on your W-2.
A flat monthly car allowance with no mileage log is different. It's usually treated as taxable pay. So is the part of any reimbursement that runs above the IRS rate.
On your federal return, almost certainly not. The 2017 tax law suspended the deduction for unreimbursed employee expenses through 2025, and the 2025 tax law (the One Big Beautiful Bill Act) made that permanent. A few groups can still claim them on Form 2106, including Armed Forces reservists, qualified performing artists, fee-basis state and local officials, and people with impairment-related work expenses.
Some states still allow the deduction on the state return, California among them. Self-employed people and independent contractors are a separate case: they deduct business miles on Schedule C, which lowers both income tax and self-employment tax. Gig drivers should log every business mile for that reason. The Self-Employment Tax Calculator shows what that deduction is worth.
Not under federal law, unless unpaid vehicle costs push your pay below minimum wage. Some states, including California, Illinois, Iowa, New Hampshire, Montana, North Dakota and South Dakota, require employers to cover necessary work expenses.
For business driving it is 72.5 cents per mile from January 1 to June 30, 2026, and 76 cents per mile from July 1 to December 31, 2026. Medical and military moving miles went from 20.5 to 23.5 cents, and charity miles stay at 14 cents.
No. The IRS rate is a tax benchmark, not a legal minimum. Employers can pay less, or use a flat allowance, as long as they meet minimum wage and any state law that requires full reimbursement.
Not when it is paid under an accountable plan at or below the IRS rate, with a mileage log. A flat car allowance without records, or the part paid above the IRS rate, is usually taxable wages.
Not on the federal return for most people. The deduction was suspended in 2018 and the 2025 tax law made that permanent. Reservists, qualified performing artists, fee-basis officials and some others are exceptions, and a few states still allow it.