Minnesota’s mileage reimbursement law does not require private employers to pay employees back for using a personal vehicle on the job, but most do — and when they do, the payment is almost always tied to the IRS standard business mileage rate, which is 72.5 cents per mile beginning January 1, 2026.1Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile, Up 2.5 Cents Federal wage law, tax rules, and any written policy your employer has adopted are what actually give the payment teeth.
Is Mileage Reimbursement Required in Minnesota?
For private-sector employees, no. Minnesota has no statute forcing a private business to reimburse work-related driving. If your employer has never written a policy promising reimbursement, state law by itself will not make them pay.
Two groups are treated differently. Public employees fall under Minnesota Statute 471.665, which authorizes municipalities to set mileage allowances for their officers and employees; most local governments track the IRS rate.2Justia Law. Minnesota Statutes Chapter 471 Section 471.665 Injured workers are the other group: Minnesota’s workers’ compensation system requires employers to reimburse mileage tied to medical treatment and vocational rehabilitation.
The absence of a state mandate does not mean private employees are unprotected. Federal minimum wage rules can force reimbursement in specific circumstances, and IRS tax rules give almost every employer a strong reason to reimburse voluntarily. Both are covered below.
The 2026 IRS Standard Mileage Rate
The IRS business rate for 2026 is 72.5 cents per mile, up 2.5 cents from 2025.1Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile, Up 2.5 Cents The rate is designed to cover gas, insurance, depreciation, maintenance, and every other cost of operating a personal vehicle for work. It applies to cars, vans, pickups, and panel trucks, including electric and hybrid vehicles.
The math is simple. Multiply business miles by the rate. Four hundred business miles in a month comes to $290. Employers can pay less, and they can pay more, but the IRS rate acts as the practical ceiling for tax-free treatment.
Which Miles Count
Not every mile you drive for work is reimbursable. The IRS separates commuting from business travel, and most employer policies follow the same line.
Driving from home to your regular workplace is commuting. It is not reimbursable and not deductible, no matter the distance.3Internal Revenue Service. Publication 463 – Travel, Gift, and Car Expenses Once you reach your regular workplace, trips to a client site, a second office, or another work destination during the day are business travel.
One exception matters. If you have a regular office but your employer sends you to a temporary work location, the round trip between your home and that temporary site counts as business mileage, even if you never stop at your regular office that day.3Internal Revenue Service. Publication 463 – Travel, Gift, and Car Expenses A clear written policy from your employer should tell you which trips to log.
The FLSA Minimum Wage Floor
Federal wage law creates the one hard reimbursement obligation that reaches private Minnesota employers. Under the FLSA’s “free and clear” rule, wages must reach the employee without any direct or indirect kickback to the employer. If your employer requires you to drive your own vehicle for work, and the out-of-pocket costs push your effective hourly pay below minimum wage in any workweek, that is a federal violation.4eCFR. 29 CFR 531.35 – Free and Clear Payment; Kickbacks
The Department of Labor treats vehicle costs the same way it treats required uniforms or tools: the employer cannot shift the cost onto the employee if doing so eats into minimum wage or required overtime pay.5U.S. Department of Labor. Fact Sheet 16 – Deductions From Wages for Uniforms and Other Facilities An employer cannot dodge this by asking the employee to pay the company back in cash rather than through payroll.
The protection matters most for delivery drivers, home health aides, and other workers whose jobs demand heavy driving and whose wages sit close to the minimum. An employee at $15 an hour spending $80 a week on gas and vehicle wear for work errands may drop below the effective minimum once those costs come out. In that case the employer must reimburse enough to keep the employee above the floor.
Minnesota’s Wage Deduction Protection
Minnesota Statute 181.79 adds a related protection. Your employer cannot deduct money from your wages for lost property, damage, or a claimed debt unless you voluntarily authorize the deduction in writing after the loss occurs, or a court holds you liable.6Minnesota Office of the Revisor of Statutes. Minnesota Statutes 181.79 – Wages Deductions for Faulty Workmanship, Loss, Theft, or Damage Even with written consent, the deduction cannot exceed what would be subject to garnishment under state law.
This becomes relevant when an employer tries to offset a mileage payment against other wage amounts, or pulls vehicle-related costs from paychecks without proper authorization. An employer who violates the statute is liable for double the improper deduction in a civil action.6Minnesota Office of the Revisor of Statutes. Minnesota Statutes 181.79 – Wages Deductions for Faulty Workmanship, Loss, Theft, or Damage
How Reimbursement Is Taxed
Tax treatment depends on whether the employer’s plan qualifies as an “accountable plan” under IRS rules. An accountable plan has three requirements:7eCFR. 26 CFR 1.62-2 – Reimbursements and Other Expense Allowance Arrangements
- A business connection. The payment covers expenses the employee actually incurred doing the job. A flat monthly car stipend unrelated to real driving is not an accountable plan.
- Substantiation. The employee gives the employer adequate records of each expense — dates, destinations, business purposes, and miles driven. The IRS safe harbor allows submission within 60 days after the trip.
- Return of any excess. If an advance exceeds the substantiated expenses, the employee returns the difference within a reasonable time.
When all three are met and the payment is at or below 72.5 cents per mile, the reimbursement stays off the employee’s W-2 entirely and is not subject to income tax, Social Security, or Medicare tax.3Internal Revenue Service. Publication 463 – Travel, Gift, and Car Expenses The employer deducts it as a business expense. If any one requirement fails, every dollar paid becomes taxable wages, reportable on the W-2, with withholding and employment taxes owed.8Internal Revenue Service. Revenue Ruling 2003-106
One consequence has grown much larger since 2018. The Tax Cuts and Jobs Act suspended the personal deduction for unreimbursed employee business expenses, and the One Big Beautiful Bill of 2025 made that suspension permanent.9Office of the Law Revision Counsel. 26 USC 67 – 2-Percent Floor on Miscellaneous Itemized Deductions If your employer does not reimburse, you cannot deduct the miles on your federal return. The money is simply gone. That is why employer policy matters far more than it did a decade ago.
Keeping a Compliant Mileage Log
Section 274(d) of the Internal Revenue Code requires vehicle expenses to be substantiated with adequate records showing the amount, the time and place of travel, the business purpose, and the business relationship involved.10Office of the Law Revision Counsel. 26 USC 274 – Disallowance of Certain Entertainment, Etc., Expenses A workable log captures, for every business trip:
- The specific date, not a weekly or monthly summary.
- The destination and general area or address.
- A short business purpose, such as “client meeting” or “supply pickup.”
- The business miles for that trip.
- Odometer readings at the start and end of each tax year, and whenever a new vehicle enters business use.
Submit logs on a regular schedule rather than at year-end. The IRS treats substantiation within 60 days of the expense as timely. Logs reconstructed from memory months later tend to fail under audit. A spreadsheet or mileage app that records trips in real time works, as long as every field above is captured.
If Your Employer Won’t Pay
Start with the employer’s internal process. Most disputes over mileage trace back to a vague policy or inconsistent application, and pointing to the written policy in your handbook resolves many of them. If there is no written policy, that gap itself is worth raising.
When internal channels stall, the Minnesota Department of Labor and Industry accepts wage-related complaints through its online portal.11Minnesota Department of Labor and Industry. Complaints DOLI handles unpaid wages, unauthorized deductions, and related claims. Filing is free and does not require a lawyer.
If the issue is unreimbursed expenses that pushed your effective pay under minimum wage, the federal Wage and Hour Division is the right agency. You can file a confidential complaint by calling 1-866-487-9243 or through the DOL website. Federal law prohibits retaliation for filing a complaint or cooperating with an investigation.12U.S. Department of Labor. How to File a Complaint
Civil court is the fallback. An employee can sue for reimbursement owed under a written policy, for improper wage deductions under Minnesota Statute 181.79, or for FLSA minimum wage violations. You will need to prove the employer failed to follow its own policy or broke wage law, so keep your own copies of mileage logs, reimbursement submissions, and pay stubs from the first day you drive for work.