Understanding mileage reimbursement in Virginia is important for both employers creating fair compensation policies and employees who use their personal vehicles for work.
While the Commonwealth of Virginia has specific labor laws, including its own minimum wage, it's crucial to know how these apply to mileage expenses and how federal guidelines often come into play.
This guide will cover typical mileage rates used in Virginia, relevant legal considerations for private employers, and how Fyle can help simplify your mileage tracking and reimbursement.
Virginia Mileage Reimbursement Rate
For private employers in Virginia, it's important to note that state law does not mandate a specific mileage reimbursement rate. There isn't a legislated per-mile amount that companies are legally required to pay employees for using their personal vehicles for business-related travel.
Despite this, many businesses across Virginia choose to use the standard mileage rates published annually by the Internal Revenue Service (IRS) as a practical and fair benchmark. This is a common approach because:
- It offers a nationally recognized standard that reflects the average costs of operating a vehicle for business, including expenses like fuel, maintenance, insurance, and depreciation.
- Reimbursements made at or below the current IRS standard business rate are generally non-taxable income for the employee, provided proper records are maintained.
- It provides a consistent and transparent method 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.
For historical context, here are the IRS standard business mileage rates from recent years:
It's important to distinguish that Virginia sets a specific mileage rate for injured workers traveling for workers' compensation medical treatment. Effective January 1, 2025, this rate is 50.0 cents per mile ($0.50).
However, this rate is exclusively for workers' compensation-related medical travel and does not apply to general business mileage reimbursement by private employers.
Virginia Mileage Reimbursement Calculator
Need to quickly estimate your mileage reimbursement? Our Mileage Reimbursement Calculator can help.
Using the 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, as these are a common benchmark in Virginia.
- Input the total business miles driven. The calculator will then provide an estimated reimbursement amount, offering a helpful figure for both employees and employers in Virginia.
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Some Important Virginia Mileage Reimbursement Laws
While Virginia doesn't set a specific mileage reimbursement rate for private companies, certain labor laws are crucial to consider:
1. No State-Mandated Rate
To reiterate, Virginia law does not require private employers to reimburse employees for mileage at a specific rate.
2. Virginia Minimum Wage Act (§ 40.1-28.10)
This is the most significant legal consideration. Employers must ensure that any unreimbursed business-related expenses, such as mileage for work-related travel in an employee's personal vehicle, do not cause an employee's effective hourly wage to fall below the Virginia minimum wage.
- Currently, Virginia's minimum wage is $12.41 per hour, effective January 1, 2025.
- If unreimbursed driving costs effectively drop an employee’s earnings below the $12.00 per hour threshold (or any future reenacted higher rate) for their workweek, it could constitute a minimum wage violation under Virginia law and the federal Fair Labor Standards Act (FLSA).
3. Adherence to Company Policy/Agreements (Virginia Code § 40.1-29)
If an employer establishes a policy or enters into an agreement to reimburse employees for mileage, they are expected to honor that commitment.
Virginia law requires employers to pay all wages and other benefits promised to employees as part of their terms of employment.
4. Record-Keeping
While Virginia law might not prescribe a specific format for mileage logs for private employers, maintaining accurate and contemporaneous records is a best practice and essential for:
- Employers: To substantiate any reimbursement amounts paid and to have records in case of an FLSA or Virginia Minimum Wage Act inquiry.
- 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.
Virginia Mileage Reimbursement Law vs Federal Law
Understanding the relationship between Virginia's approach and federal law provides additional clarity:
Federal Law (FLSA)
- The FLSA does not explicitly mandate mileage reimbursement by private employers.
- Its primary role in this context is ensuring that unreimbursed work-related expenses do not illegally reduce an employee's wages below the federal minimum wage ($7.25 per hour).
Virginia State Law
- Aligns with Federal Principle but Higher Minimum: Virginia law does not have a separate statute compelling private employers to reimburse mileage at a specific rate, similar to federal law. However, Virginia's own minimum wage is $12.41 per hour, which is higher than the federal minimum. Therefore, the protection against unreimbursed expenses reducing pay below the minimum wage applies to this higher state-set floor.
- Enforcement of Promised Benefits: Virginia law ensures that employers pay wages and benefits that have been promised to employees.
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 Virginia employers, like those nationally, use the IRS rates as a standard for their reimbursement policies.
In Virginia, the legal landscape for private employers concerning mileage reimbursement is primarily shaped by the Virginia Minimum Wage Act, ensuring employee pay doesn't dip below $12.41 per hour due to work expenses, rather than specific state mandates on reimbursement rates.
However, any promises made regarding reimbursement should be upheld.
How Fyle Can Automate Mileage Tracking for Your Virginia Business
Manual mileage tracking can be time-consuming and prone to inaccuracies.
Fyle offers an intelligent, automated solution designed to simplify mileage tracking and reimbursement for businesses across the Commonwealth.
- Easy mileage tracking: Fyle integrates with Google Maps, providing accurate distance calculations for all work-related travel, giving you confidence in your reimbursement data.
- Compliance with Virginia wage laws: By facilitating accurate mileage logs, Fyle helps Virginia businesses maintain the necessary records to demonstrate that employee earnings comfortably meet or exceed the $12.41 per hour state minimum wage, even after accounting for vehicle use for company purposes.
- Save time and manual effort: Free up your employees from the hassle of manual logs and complicated spreadsheets. Fyle’s mobile app allows for effortless mileage tracking on the go. Employees can even submit expenses through text message and Gmail, streamlining the entire process.
- Flexible for your needs: If your company chooses to set a specific reimbursement rate—be it the IRS standard or a custom rate—Fyle offers the customization to adapt to your business’s policies.
- Smooth accounting integrations: Fyle connects with popular accounting software such as QuickBooks, Sage, Xero, and NetSuite. This ensures that mileage expense data flows directly and accurately into your financial systems, simplifying reconciliation for your operations.
- Keep Reimbursements on Schedule: Automated approval workflows and timely reminders mean that mileage reports are submitted and processed efficiently, ensuring your employees receive their reimbursements without unnecessary delays.
Don't let outdated mileage tracking methods slow down your business. See how Fyle can bring new levels of efficiency, accuracy, and ease to your mileage reimbursement procedures.
