Illinois has set its 2025 business mileage reimbursement rate at $0.70 per mile, in accordance with the federal standard established by the Internal Revenue Service. While employers retain the flexibility to offer reimbursements that deviate from this benchmark, it is important to note that any compensation exceeding the IRS threshold becomes subject to taxation.

The standard rates set by the IRS, incorporate comprehensive cost factors associated with vehicle operation, including fuel consumption, routine maintenance expenses and the gradual depreciation of the asset over time.

Note: Organizations have flexibility to reimburse employees at rates that differ from the IRS standard. However, any reimbursement exceeding the IRS rate will be classified as taxable income to the employee.

To calculate applicable mileage reimbursement for Illinois, do 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.

Employers in Illinois must reimburse staff who use personal vehicles for work-related travel, a requirement firmly established in state law rather than left to company discretion.

The Illinois Wage Payment and Collection Act (820 ILCS 115/9.5) mandates these reimbursements as a legal obligation, not merely as an optional workplace benefit to enhance employee satisfaction.

Such reimbursements must cover the comprehensive costs of vehicle operation — not just fuel expenses, but also maintenance requirements, insurance costs and the inevitable depreciation of the asset.

Companies should establish clear policies requiring documentation of business miles within the 30-day window specified by law. A well-structured expense reporting system helps ensure compliance with these statutory requirements.

Employers must also verify that any unreimbursed vehicle expenses don't effectively reduce an employee's earnings below the state's minimum wage threshold, as this could expose the company to potential legal consequences.

Legal implications of non-compliance with Illinois wage payment and collection act

Employers who fail to meet their mileage reimbursement obligations face serious consequences. When companies don't comply with Illinois law, they must pay not only the original amounts owed but also additional damages of 5% of the underpaid sum for each month reimbursements remain outstanding.

The financial penalties don't end there. The Illinois Department of Labor enforces compliance through fines ranging from $250 to $1,000, creating a significant incentive for employers to fulfill their legal obligations promptly.

These combined penalties—compensatory payments to employees plus regulatory fines to state authorities—reflect Illinois' commitment to protecting workers who use personal vehicles for business purposes.

Note: In addition to the Illinois penalties, employers may face separate federal sanctions if reimbursement failures result in minimum wage violations under national labor standards.

Illinois vs federal mileage reimbursement laws

More expansive than federal standards, Illinois law establishes a more rigorous framework for employee mileage reimbursement. While federal regulations generally require reimbursement only when necessary to prevent minimum wage violations, Illinois imposes broader obligations on employers.

The Illinois Wage Payment and Collection Act (820 ILCS 115/9.5) creates a more comprehensive mandate, requiring employers to compensate workers for all necessary expenditures directly connected to their employment responsibilities. This statute explicitly categorizes such reimbursements as elements of employee compensation, establishing a more robust legal foundation than exists at the federal level.

This distinction underscores Illinois' position among states that have enacted worker protections exceeding the baseline standards established in federal labor law.

Managing employee mileage reimbursement effectively requires both attention to detail and proactive planning. Implementing these practical strategies can help Illinois businesses control costs while maintaining full compliance with state regulations.

Regularly review employee mileage logs

Monthly audits of employee travel documentation help identify unusual patterns or inaccuracies before they impact your bottom line. These reviews verify that claimed business travel aligns with actual work assignments and geographic reasonability. Regular checks create accountability while ensuring legitimate business travel receives prompt compensation according to Illinois regulations.

Encourage route optimization

Strategic route planning reduces unnecessary mileage accumulation and creates immediate cost savings for Illinois employers. By helping employees plan efficient travel between multiple destinations, businesses minimize total distance while maximizing productive time. This approach decreases reimbursement obligations and enhances workforce efficiency by reducing time spent in transit.

Use expense management software to automate tracking

Modern expense management software solutions transform mileage reimbursement from an administrative burden into a streamlined, error-resistant process. Solutions like Brex automatically calculate proper reimbursement amounts based on documented mileage, eliminating manual errors while creating audit trails that support compliance with Illinois requirements.

Clearly communicate your mileage reimbursement policy

Clear expense policy guidelines eliminate confusion and prevent disputes regarding reimbursement eligibility. Illinois employers should provide written documentation detailing which activities qualify for mileage reimbursement, required proof standards, and submission deadlines that align with the state's 30-day window. When employees understand these expectations, they can properly track eligible business travel and submit complete documentation on time.

Illinois' mileage reimbursement requirements demand careful attention from employers. With more stringent standards than federal law, Illinois requires comprehensive reimbursement for all necessary business travel expenses. By following the state's current rate of $0.70 per mile for 2025, establishing clear documentation policies, and ensuring timely payments, businesses can maintain compliance while fostering a supportive workplace environment for employees who use personal vehicles.

Brex's expense management software streamlines this entire process, eliminating the administrative burden of tracking and processing mileage reimbursements. Brex allows employers to automatically calculate appropriate reimbursement amounts, set reasonable spend limits on employee travel expenses, and seamlessly integrate these transactions into your accounting software. With automated approval workflows and digital receipt capture, Brex transforms a potentially complex compliance obligation into a simple, efficient process for both employers and employees.

Don't risk non-compliance penalties or employee dissatisfaction. Sign up for Brex today and transform how your business handles mileage reimbursement and all employee expenses. Brex not only ensures you meet Illinois' legal requirements but also provides valuable insights into travel spending patterns that can help optimize your business operations. Take the first step toward simpler expense management and stronger regulatory compliance—your employees and your bottom line will thank you.