Alabama mileage reimbursement rates and calculator (2025)

For 2025, Alabama aligns its state employee mileage reimbursement with the IRS standard rate of $0.70 per mile. Private sector employers maintain discretionary authority over their reimbursement rates, with the flexibility to establish compensation either above or below this benchmark.

The following analysis presents Alabama's standard IRS mileage rates across multiple categories, offering a view of reimbursement trends from 2022 through 2025.

To calculate applicable mileage reimbursement, use the following:

1. Select the appropriate tax year for your calculation period
2. Enter the total miles driven to compute eligible reimbursement amounts

The calculator below provides precise reimbursement figures based on current rates and specified mileage inputs.

Alabama's regulatory framework establishes distinct parameters for employee mileage reimbursement, detailing specific circumstances under which private employers face mandatory compensation requirements. While the state does not impose universal reimbursement obligations for business-related travel, certain scenarios fall under explicit regulatory oversight.

The following sections examine the key statutory provisions governing mileage reimbursement in Alabama, beginning with regulations applicable to state employees.

State employee mileage benefits under Section 36-7-22

Section 36-7-22 of the Code of Alabama 1975 establishes that state employees using personal vehicles for official business shall receive mileage reimbursement at rates consistent with the Internal Revenue Code.

The current reimbursement rate of $0.70 per mile reflects this statutory alignment with federal standards. This integration of state and federal rates serves dual administrative functions: it establishes standardized reimbursement protocols for state employees while facilitating streamlined budgetary planning and financial management across state departments.

Code of Alabama, 1975, Section 25-5-77(f) of the Workers' Compensation Act and mileage reimbursement

The Workers' Compensation Act, codified in Section 25-5-77(f) of the Code of Alabama, 1975, establishes mandatory mileage reimbursement requirements that supersede the general discretionary nature of travel compensation under state law.

Under this statutory provision, employers must provide mileage reimbursement for employees traveling to medical and rehabilitation appointments resulting from workplace injuries. This compensation must align with official state travel rates, currently set at $0.70 per mile.

Enacted on August 1, 1992, this provision serves dual objectives: mitigating the financial impact on injured workers while ensuring accessibility to necessary medical treatment and rehabilitation services after workplace injuries.

The statute's requirements remain binding irrespective of the broader regulatory framework, which does not mandate reimbursement for general business-related travel. This creates a clear distinction between discretionary business travel compensation and the mandatory reimbursement for medical-related travel under workers' compensation provisions.

Alabama minimum wage

While Alabama operates without a wage act governing mileage reimbursement, employers must ensure compliance with federal minimum wage requirements of $7.25 per hour. This obligation extends to scenarios where unreimbursed mileage expenses would effectively reduce employee compensation below the federal minimum wage threshold, regardless of workers' compensation status.

Employment law principles further establish that voluntary mileage reimbursement policies, when implemented, must be administered equitably and consistently within the framework of employment agreements. This approach aligns with fundamental employment law doctrine regarding the allocation of necessary business expenses, which supports shifting operational costs from employees to employers to prevent disproportionate financial burdens.

Employers weighing mileage reimbursement policies increasingly focus on tax implications alongside legal compliance. While Alabama state law imposes no requirement to compensate employees for routine business travel, the tax advantages of proper reimbursement structures benefit both parties.

The Internal Revenue Code permits employers to establish "accountable plans" that reimburse mileage at or below the federal standard rate—currently 70 cents per mile for 2025—without triggering taxable income for employees. When workers properly document their business travel through mileage logs or expense reports and receive reimbursement within these parameters, the amounts remain exempt from both federal income and payroll taxes. This arrangement minimizes administrative burden while ensuring employees recover their full travel expenses.

Complications arise when reimbursements exceed federal guidelines. Any amount above the IRS rate becomes taxable wages for employees. Similarly, companies offering fixed car allowances without requiring documentation typically see the entire amount classified as compensation subject to taxation. To avoid these complications and added payroll costs, many employers carefully structure reimbursements to preserve their tax-exempt status.

For employees receiving no reimbursement, the situation has worsened under current tax law. The Tax Cuts and Jobs Act suspended the deduction for unreimbursed business expenses from 2018 through at least 2026. Consequently, W-2 employees cannot claim tax deductions for business use of personal vehicles, regardless of how substantial those costs might be. This leaves workers with no tax relief for business-related driving expenses.

By implementing accountable reimbursement plans, employers not only help staff avoid significant out-of-pocket expenses but also mitigate potential wage-and-hour disputes. For many companies, offering mileage reimbursement at or near the IRS rate represents a balanced approach that satisfies federal requirements while bolstering workforce satisfaction.

Avenue One has taken a different approach to employee mileage reimbursement. As an investment platform and marketplace that enables transparent and efficient large-scale investments in single-family rentals, Avenue One has many employees on the road in various markets.

Avenue One uses Brex to create and assign spend limits for those fleet-specific expenses. “We wanted to restrict the field team’s spend to gas and routine car maintenance,” said Katherine Spiller, assistant controller at Avenue One. “We were able to create a vendor category for this. If the vendor doesn’t fall under the gas or car maintenance category, then the card will be declined.”

Katherine adds that managers only have to review expenses by exception, shaving off 10 hours of unnecessary reviews per month: “Employees and managers rarely need the finance team’s help, because they have an easy self-service solution at their fingertips,” she said. “We’re effectively pre-authorizing expenses before they happen and enforcing those policies through the card itself.”

The result? A more efficient approach to mileage reimbursement using a smart corporate card that also deeply integrates with NetSuite — vastly reducing the need for manual, time-consuming expense reconciliation.

Alabama handles mileage reimbursement differently for government and private workers. State employees get paid back at the federal rate of $0.70 per mile when using their own cars for work. Private companies don't have to pay employees back for regular business travel, but they must reimburse workers for trips to medical appointments after workplace injuries. Many smart companies choose to pay mileage anyway because it helps them keep good employees in today's competitive job market.

This mixed approach to mileage reimbursement shows how workplace benefits are changing across the country. Companies that create clear, fair policies for paying back employee expenses are more likely to attract and keep talent. When employees know they'll be paid back fairly for using their own cars, they tend to be happier at work and less likely to look for jobs elsewhere.

Brex's expense management software makes handling these reimbursements much easier for businesses. The platform automatically processes expense claims, lets managers set spending limits, and helps create clear expense policies everyone can follow. It also connects directly with popular accounting software, saving time and reducing mistakes. Companies using Brex report that their employees are happier with the expense reimbursement process, and managers appreciate seeing all company spending in one place. For businesses looking to improve how they handle employee expenses, Brex offers a simple solution that can make a big difference.