Understanding mileage reimbursement in Illinois is vital for both employers who need to comply with state law and employees who use their personal vehicles for work. Unlike many states, Illinois has specific legal requirements for private employers regarding the reimbursement of business expenses, including travel.
This guide will detail common mileage rates, explain Illinois' important labor laws, and show how Fyle can simplify your mileage tracking and reimbursement processes.
Illinois Mileage Reimbursement Rate
A key question for Illinois businesses and workers is, "What is the official mileage reimbursement rate?" For private employers in Illinois, state law mandates the reimbursement of all necessary travel expenses, but it does not set a specific per-mile rate.
The critical piece of legislation is the Illinois Wage Payment and Collection Act (IWPCA), specifically Section 820 ILCS 115/9.5. This law states: "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."
"Necessary expenditures" are defined 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." This clearly includes mileage costs incurred when using a personal vehicle for business travel.
While the law requires reimbursement, it doesn't stipulate a particular rate. Therefore, many Illinois businesses choose to use the standard mileage rates published by the Internal Revenue Service (IRS) as a benchmark. This is a widely adopted and advisable practice because:
- The IRS rate is designed to reflect the average costs of operating a vehicle for business purposes (fuel, maintenance, insurance, depreciation).
- Using the IRS rate is generally considered a reasonable measure to meet the "necessary expenditures" requirement under Illinois law.
- Reimbursements at or below the current IRS standard business rate are typically non-taxable income for the employee, provided proper records are maintained.
As of January 1, 2025, the IRS standard mileage rates are:
- 70 cents per mile for business miles driven.
- 21 cents per mile driven for medical or moving purposes (note: the deduction for moving expenses is currently limited to active-duty members of the U.S. Armed Forces).
- 14 cents per mile driven in service of charitable organizations.
Here are the IRS standard business mileage rates from recent years for context:
It's also noteworthy that the State of Illinois, for its own employees, has set the mileage reimbursement rate at 70 cents per mile effective January 1, 2025, aligning with the IRS rate. While this specific directive is for state employees, it underscores the reasonableness of the IRS rate in the eyes of state authorities.
Illinois Mileage Reimbursement Calculator
Need to estimate your mileage reimbursement based on commonly accepted rates? Our Illinois Mileage Reimbursement Calculator can assist.
Using the Mileage Reimbursement Calculator is simple:
- Select the tax year for which you want to calculate the reimbursement. Our calculator uses the applicable IRS standard mileage rates, which are a widely accepted benchmark in Illinois for covering necessary travel expenses.
- Input the total business miles driven. The calculator will then provide an estimated reimbursement amount, offering a helpful guideline for both employees seeking reimbursement and employers fulfilling their obligations under Illinois law.
Calculate
Results
Some Important Illinois Mileage Reimbursement Laws
Illinois has robust laws ensuring employees are compensated for business expenses:
1. Mandatory Reimbursement of Necessary Expenses (820 ILCS 115/9.5)
This is the cornerstone. The Illinois Wage Payment and Collection Act mandates that employers must reimburse employees for all necessary expenditures incurred while performing their job duties. This includes, but is not limited to, mileage for business travel.
Failure to do so can result in wage claims filed with the Illinois Department of Labor.
2. No Specific Rate Set by Mandate for Private Employers
While reimbursement is required, the IWPCA does not specify the exact per-mile rate. Employers must ensure the amount reimbursed is sufficient to cover the "necessary expenditures."
Using a rate lower than what is generally considered reasonable (like the IRS rate) could lead to disputes.
3. Illinois Minimum Wage
The minimum wage in Illinois is $15.00 per hour. While the IWPCA's expense reimbursement requirement is a separate and direct mandate, the state's minimum wage law also provides a foundational protection.
Unreimbursed (or under-reimbursed) necessary business expenses should not effectively reduce an employee's earnings below this minimum.
4. Record-Keeping
To comply with the IWPCA and for sound business practice, maintaining detailed and accurate records of business mileage is essential.
This includes dates, destinations, business purpose, and mileage for each trip. These records are crucial for employers to demonstrate they have covered necessary expenses and for employees to substantiate their claims.
Illinois Mileage Reimbursement Law vs Federal Law
Understanding the differences between Illinois law and federal law is key for compliance:
Federal Law (FLSA)
- The Fair Labor Standards Act does not explicitly require mileage reimbursement by private employers, unless the failure to do so would reduce an employee's net earnings below the federal minimum wage ($7.25 per hour).
Illinois State Law
- Direct Mandate for Reimbursement: Unlike federal law alone, Illinois law (820 ILCS 115/9.5) directly mandates that employers reimburse employees for all necessary travel expenses. This obligation exists irrespective of whether the non-reimbursement would push the employee below the minimum wage, although that remains a separate consideration.
- No Specific Rate Set by Mandate: Illinois law does not set a specific per-mile rate for this reimbursement, requiring only that "necessary expenditures" be covered.
- Higher State Minimum Wage: Illinois' minimum wage of $15.00 per hour is significantly higher than the federal minimum. This provides an additional layer of wage protection for employees.
IRS Guidelines
- These are federal tax guidelines establishing the rate at which mileage reimbursement is generally non-taxable. They do not, by themselves, compel employers to pay this rate. However, in Illinois, given the mandate to cover "necessary expenses," the IRS rate serves as a strong benchmark for what is considered a reasonable reimbursement.
In Illinois, the legal requirement to reimburse necessary travel expenses under the Wage Payment and Collection Act is more explicit and protective for employees than under federal law alone.
How Fyle Can Automate Mileage Tracking for Your Illinois Business
With Illinois' clear mandate for reimbursing all necessary travel expenses, accurate and efficient mileage tracking is not just a best practice—it's a compliance imperative.
Fyle offers a cutting-edge, automated solution to help businesses across Illinois manage mileage tracking and reimbursement with precision, ease, and full adherence to state law.
- Ensure compliance with Illinois law (820 ILCS 115/9.5): Fyle’s meticulous mileage tracking, powered by Google Maps, provides the detailed and accurate records essential to demonstrate that all "necessary expenditures" for employee travel are captured and reimbursed, fulfilling your obligations under the Illinois Wage Payment and Collection Act.
- Pinpoint accuracy for every Illinois trip: Whether your team is navigating Chicago's grid, conducting business in university towns, or covering routes across the state, Fyle ensures precise logging of every business mile. This accuracy is vital for fair reimbursement and robust record-keeping.
- Protect employee earnings & uphold wage standards: By facilitating comprehensive and accurate mileage reimbursement, Fyle helps ensure that your employees’ wages are not diminished by out-of-pocket travel costs, supporting compliance with Illinois’ $14.00/hour minimum wage.
- Save valuable time for your workforce: Free your employees from the burden of manual logs and retrospective calculations. Fyle’s intuitive mobile app enables effortless, often automatic, mileage capture. Integrations with everyday tools like Slack and Gmail further simplify the expense submission process.
- Customizable to align with your business practices: While using the IRS rate is a strong approach in Illinois, Fyle allows you to set custom rates or rules if your company policy offers different calculations, ensuring flexibility while maintaining auditable records.
- Streamlined integrations & timely payments: Fyle integrates seamlessly with major accounting platforms like Sage, QuickBooks, Xero, and NetSuite, ensuring accurate transfer of mileage expense data. For US-based companies, Fyle also supports direct ACH payments, facilitating prompt reimbursements for your Illinois employees.
Stay ahead of compliance requirements and empower your team with an efficient mileage management system. See how Fyle can transform your approach to mileage tracking and reimbursement in Illinois.
