Understanding mileage reimbursement in Minnesota requires looking at state-specific labor laws, particularly concerning minimum wage and allowable deductions, as well as common practices adopted by employers. While Minnesota doesn't mandate a specific reimbursement rate for all private employers, certain rules ensure employees aren't unfairly burdened by work-related travel costs.
This guide provides insights into Minnesota's approach to mileage rates, relevant laws, and how technology can simplify managing these expenses.
Minnesota Mileage Reimbursement Rate
Minnesota state law does not establish a universal, specific mileage reimbursement rate that all private employers must pay. However, there are different considerations for public versus private sector employees:
- For Public Sector / State Employees: Minnesota law allows public entities (like state agencies, counties, cities, towns, and school districts) to compensate their employees for using personal vehicles for official business. These entities can set a per-mile rate or a periodic allowance. For state agency employees, rates are often similar to or based on the IRS standard rate (e.g., the 2025 IRS business rate is 70 cents per mile), but can vary based on factors like whether a state-owned vehicle was available but declined (which might result in a slightly lower rate).
- For Private Sector Employees: Private employers in Minnesota have more flexibility in setting their own mileage reimbursement policies. Many choose to use the current IRS standard mileage rates as a fair and consistent benchmark. This practice helps in transparently covering employee expenses and is important for complying with Minnesota's minimum wage laws.
The standard IRS mileage rates for 2025 are:
- Business Use: 70 cents per mile
- Medical/Moving: 21 cents per mile (Note: The federal deduction for moving expenses is generally limited to active-duty U.S. Armed Forces members)
- Charitable: 14 cents per mile
Here’s a look at recent IRS standard business mileage rates, which are often referenced by Minnesota employers who choose to reimburse mileage:
Using the IRS standard rate is a common and practical approach for private employers in Minnesota to handle mileage reimbursement fairly.
Minnesota Mileage Reimbursement Calculator
This calculator helps estimate mileage reimbursement using the standard IRS rates:
- Select the Tax Year: Choose the year for which you're calculating reimbursement (e.g., 2025, 2024) to ensure the correct IRS rates are applied.
- Enter Your Mileage: Input the total miles driven for business, medical/moving, and charitable purposes.
- See Your Calculation: Click the "Calculate" button to get an estimate of your total reimbursement based on the entered mileage and the selected year's rates.
This tool is helpful for employees estimating their travel costs and for employers using IRS rates as a basis for reimbursement.
Calculate
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Some Important Minnesota Mileage Reimbursement Laws
While Minnesota doesn't have a direct law compelling all private employers to reimburse mileage at a set rate, several state laws and regulations are highly relevant:
No General Mandate for Private Employers
Minnesota law does not generally require private employers to reimburse employees for mileage expenses. The decision to reimburse and the rate used are often matters of company policy.
Minnesota Fair Labor Standards Act (Minimum Wage - Minnesota Statute §177.24)
This is a critical piece of legislation. Minnesota Statute §177.24 and related rules stipulate that unreimbursed necessary business expenses, including "travel expenses in the course of employment" (excluding normal commuting), cannot cause an employee's effective wages to fall below Minnesota's state minimum wage.
Minnesota has its own minimum wage rates (which differ for large and small employers and are adjusted annually for inflation). This means if an employee incurs mileage costs for work, and those costs, if unreimbursed, drop their pay below the applicable state minimum wage for the hours worked, the employer may be required to compensate for those expenses to meet the minimum wage threshold.
Deductions for Expenses (Minnesota Statute §177.24 and DLI Guidance)
Minnesota law limits the deductions an employer can make from an employee's wages.
Specifically, deductions for items like purchased or rented uniforms or equipment required for the job cannot reduce wages below the minimum wage, and any such deductions (up to $50) must be reimbursed to the employee upon separation from employment.
The Minnesota Department of Labor and Industry (DLI) guidance indicates that employers can make deductions for "travel expenses incurred for work." However, any such deductions must still ensure the employee receives at least the minimum wage for all hours worked.
Workers' Compensation Travel
Minnesota's Workers' Compensation Act requires employers (including private sector employers) to reimburse injured employees for reasonable mileage expenses incurred for travel to and from medical appointments and vocational rehabilitation services related to a work injury.
Minnesota Wage Theft Law
Minnesota has enacted a wage theft law that makes it a crime for employers to intentionally fail to pay employees all wages owed. This could be relevant if improper deductions for expenses or failure to meet minimum wage obligations (due to unreimbursed expenses) occur.
Public Employee Reimbursement
As mentioned, specific statutes (like Minnesota Statute §471.665 for municipalities) and state policies govern mileage reimbursement for state, county, city, town, and school district employees. These rules are distinct from those applying to the private sector.
For private sector employees in Minnesota, the state's minimum wage law and rules around wage deductions are the most important legal safeguards concerning work-related travel expenses.
Minnesota Mileage Reimbursement Law vs Federal Law
Comparing Minnesota's framework to the federal Fair Labor Standards Act (FLSA):
Minnesota Law (for Private Employers)
- No direct mandate to reimburse mileage at a specific rate.
- Crucially, the Minnesota Fair Labor Standards Act requires that unreimbursed necessary work expenses do not reduce an employee's pay below the state minimum wage. Minnesota's minimum wage rates are often higher and more complex (with tiers for large/small employers) than the federal rate, making this the primary consideration.
- Specific rules apply to deductions from wages and reimbursement of certain deducted costs upon termination.
Federal Law (FLSA)
- Does not explicitly require mileage reimbursement for all employees.
- Requires that unreimbursed business expenses do not cause an employee's wages to fall below the federal minimum wage ($7.25 per hour).
For Minnesota employers, compliance with the state's own minimum wage law is paramount when considering the impact of unreimbursed employee expenses like mileage, as it generally provides a higher threshold of protection than the federal FLSA.
How Fyle Can Automate Mileage Tracking in Minnesota
Even without a specific state mandate for private employers to reimburse mileage, many Minnesota businesses choose to do so for fairness, employee satisfaction, and to ensure compliance with the state's minimum wage laws. Fyle provides an efficient way to manage this:
- Accurate mileage logging: Fyle’s integration with Google Maps ensures precise distance tracking. Employees can easily log start, stop, and end points, and Fyle automatically calculates the mileage, reducing manual effort and potential inaccuracies.
- Flexible rate configuration: Whether your company uses the IRS standard rate (e.g., 70 cents for business in 2025), a custom internal rate, or different rates for various employee groups, Fyle allows for easy setup and ensures calculations are accurate according to your policy.
- Supporting minimum wage compliance: By accurately tracking mileage and facilitating consistent reimbursement (if offered), Fyle helps businesses ensure that unreimbursed expenses do not improperly reduce an employee's effective earnings below Minnesota's state minimum wage.
- Clear policy implementation: Define and enforce your company's mileage and travel expense policies directly within Fyle. This promotes consistency and helps manage compliance with Minnesota’s rules on wage deductions.
- Efficient accounting processes: Fyle seamlessly integrates with major accounting platforms like QuickBooks, NetSuite, and Xero. This automates the transfer of approved mileage expense data, streamlining reconciliation and saving time for your finance department.
- Prompt reimbursements: For companies providing reimbursement, Fyle’s ACH capabilities (US only) enable quick and direct payment of approved claims to employees.
With Fyle, Minnesota businesses can streamline their mileage tracking and reimbursement, maintain accurate records, and more easily navigate compliance with state wage and hour laws.
