For businesses and employees across Texas, understanding mileage reimbursement is essential for managing expenses and ensuring fair compensation when personal vehicles are used for work. While Texas has its own approach to employment laws, it’s important to know how state and federal guidelines intersect, especially concerning mileage.
This guide will walk you through the typical mileage rates used in Texas, relevant legal considerations for employers, and how Fyle can help streamline your mileage tracking and reimbursement.
Texas Mileage Reimbursement Rate
When it comes to mileage reimbursement for private employers, Texas law does not mandate a specific reimbursement rate. This means there isn't a state-set amount that companies are legally required to pay per mile.
However, many businesses in Texas choose to adopt the standard mileage rates issued by the Internal Revenue Service (IRS). This is a widely accepted practice for several reasons:
- Industry Standard: The IRS rate is nationally recognized and calculated to reflect the average costs of operating a vehicle for business, including expenses like fuel, oil, maintenance, repairs, insurance, and depreciation.
- Tax implications: Reimbursements made at or below the current IRS standard business rate are generally non-taxable to the employee, provided proper records are maintained.
- Fairness and Simplicity: Using the IRS rate provides a consistent and generally accepted measure for compensating employees.
As of January 1, 2025, the key IRS standard mileage rates are:
- 70 cents per mile for business use of a vehicle.
- 21 cents per mile 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.
To provide some historical context, here are the IRS standard business mileage rates from recent years:
It's worth noting that the State of Texas does have specific reimbursement rates for its own government employees, which often align with federal rates. However, these state agency rules do not apply to private businesses.
Texas Mileage Reimbursement Calculator
Need to quickly estimate your mileage reimbursement? Our Texas Mileage Reimbursement Calculator can help.
Using the Texas Mileage Reimbursement Calculator is simple:
- Choose the tax year for which you want to calculate the reimbursement. Our calculator uses the IRS standard mileage rates applicable for that year.
- Input the total business miles driven. The calculator will then provide an estimated reimbursement amount, helping both employees and employers in Texas understand potential compensation for vehicle use.
Calculate
Results
Some Important Texas Mileage Reimbursement Laws
While Texas doesn't set a specific mileage reimbursement rate for private employers, there are important legal considerations:
1. No State-Mandated Rate
Texas law does not require private employers to reimburse employees for mileage at a specific rate. Employers are generally free to set their own policies or choose not to reimburse, subject to the critical minimum wage rule below.
2. Federal Minimum Wage (FLSA) is Key
The most crucial aspect is compliance with the federal Fair Labor Standards Act (FLSA). Unreimbursed business expenses, such as mileage for work-related travel in an employee's personal vehicle, must not cause an employee's effective hourly pay to fall below the federal minimum wage.
- Texas adheres to the federal minimum wage of $7.25 per hour.
- If an employee incurs driving expenses that are primarily for the benefit of the employer, and these costs (when factored into their weekly earnings and hours worked) reduce their pay to less than $7.25 per hour, the employer could be in violation of the FLSA.
3. Record-Keeping
While Texas law might not specify mileage log formats for private employers, maintaining accurate and contemporaneous records is a best practice and essential for several reasons:
For Employers:
To substantiate any reimbursement amounts and to have records in case of an FLSA wage and hour inquiry.
For Employees:
To justify reimbursement requests according to company policy and for personal tax purposes if applicable. IRS guidelines generally require logs to include dates of travel, business purpose, miles driven, and locations.
4. Written Policies (Best Practice):
Although not mandated by a specific Texas "policy adherence" statute for mileage, if an employer chooses to offer mileage reimbursement, it's a strong best practice to have a clear, written policy. This policy should outline the reimbursement rate, what types of travel qualify, required documentation (e.g., mileage logs), and the submission process.
Clear policies prevent misunderstandings and ensure consistent application.
Texas Mileage Reimbursement Law vs Federal Law
Understanding the interplay between Texas's approach and federal guidelines is helpful:
Federal Law (FLSA)
- The FLSA doesn't mandate mileage reimbursement directly.
- Its primary role here is ensuring that unreimbursed work-related expenses don't illegally reduce an employee's wages below the federal minimum wage ($7.25 per hour).
Texas State Law
- Aligns with Federal minimum wage: Texas uses the federal minimum wage of $7.25 per hour. Thus, the FLSA's minimum wage protection regarding unreimbursed expenses directly applies in Texas without a separate, higher state minimum wage to consider (unlike some other states).
- No specific reimbursement statute: Texas does not have its own law compelling private employers to reimburse mileage at a specific rate.
IRS Guidelines
- These are federal tax guidelines, not laws that force private employers to reimburse.
- They define the rate at which mileage reimbursements are generally non-taxable to employees. This is why many Texas employers, like those nationally, use the IRS rates (e.g., 70 cents per mile for business in 2025) as a standard for their reimbursement policies.
In Texas, the legal landscape for private employers regarding mileage reimbursement is primarily shaped by federal FLSA minimum wage requirements rather than specific state mandates on reimbursement rates.
How Fyle Can Automate Mileage Tracking for Your Texas Business
Whether your team is covering the vast distances between Texas cities or making frequent local trips, manual mileage tracking can be cumbersome and prone to errors. Fyle offers an intelligent, automated solution to simplify mileage tracking and reimbursement for businesses across Texas.
- Precise mileage capture: Fyle integrates with Google Maps, providing precise distance calculations for all work-related travel, giving you confidence in your reimbursement data.
- Uphold compliance with wage laws: By ensuring accurate mileage logs, Fyle helps Texas businesses maintain the records needed to demonstrate that employee earnings comfortably exceed minimum wage requirements, even after accounting for vehicle use for company purposes.
- Save time for your Texas team: Free up your employees from the drudgery of manual logs and spreadsheets. Fyle’s mobile app (available for iOS and Android) allows for effortless mileage tracking on the go. Employees can even submit expenses through familiar tools like Slack or Microsoft Outlook, streamlining the entire process.
- Flexible for your business needs: If you decide to set a specific reimbursement rate different from the IRS standard, or need to categorize trips for different projects common in diverse Texas industries, Fyle offers the customization to adapt to your company’s policies.
- Smooth integration with accounting systems: Fyle connects with popular accounting software such as Sage, QuickBooks, Xero, and NetSuite, ensuring that mileage expense data flows directly into your financial systems. For US-based companies, Fyle also supports ACH payments for swift employee reimbursements.
- Keep reimbursements on track: Automated approval workflows and timely reminders mean that mileage reports are submitted and processed efficiently, ensuring your Texas employees receive their reimbursements without unnecessary delays.
Don't let outdated mileage tracking methods slow your Texas business down. See how Fyle can bring new levels of efficiency, accuracy, and ease to your mileage reimbursement procedures.
