In 2025, Iowa follows the IRS-established rate of $0.70 per mile for state employee reimbursement, as mandated by Iowa Code §8A.363. Private sector employers retain discretion regarding mileage compensation, with the option to implement reimbursement policies for business-related travel expenses.

The following table presents Iowa's mileage reimbursement rates according to IRS standards for 2025, along with comparative data from previous years for analytical context.

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 Iowa, 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.

In Iowa, the legal framework for mileage reimbursement addresses work-related travel expenses across both public and private sectors. State employees operate under specific guidelines established by Iowa Code §8A.363, which provides clear parameters for travel compensation.

Private sector employers face a different regulatory structure, including required mileage reimbursement for workers' compensation cases. Understanding these regulations helps businesses implement fair policies for compensating employees' travel costs, whether for routine business activities or necessary medical treatment.

The following sections examine these legal provisions in detail, outlining their practical implications for employers and organizational compliance strategies.

Iowa code §8A.363 for state employees' mileage reimbursement

Iowa Code §8A.363 establishes comprehensive mileage reimbursement guidelines for state employees. The statute encompasses various personal vehicle types utilized for official state business, including personal cars, vans, pickups, and panel trucks.

The policy requires director approval before mileage reimbursement can be processed. Notably, the statute provides flexibility for employees with disabilities who operate specially equipped vehicles, allowing the director discretionary authority to authorize higher reimbursement rates in these circumstances.

Note: The provisions of this law do not apply to elected officers, judicial officers, and members of the general assembly, who are exempt from these regulatory requirements.

Iowa workers’ compensation law

Iowa's Workers' Compensation Act establishes mandatory mileage reimbursement obligations for private employers. When workplace injuries occur, the statutory requirements create specific financial responsibilities that cannot be circumvented.

The law stipulates that employers must provide compensation for transportation expenses incurred when injured employees attend medical appointments. This reimbursement must align with current IRS business mileage rates, establishing a standardized compensation framework for injury-related travel.

Note: Employers who deny or delay claims without reasonable justification may incur significant financial penalties, including potential benefit increases of up to 50 percent.

Code 91D for Iowa minimum wage laws and its relation to mileage reimbursement

The Minimum Wage Law in Iowa, codified in Iowa Code 91D, corresponds with the Federal Minimum Wage requirement of $7.25 per hour. Enforcement responsibilities are divided between the U.S. Department of Labor for federal wage regulations and the Iowa Division of Labor for state-level compliance matters.

While the statute contains no explicit provisions addressing mileage reimbursement, employers must ensure that any unreimbursed travel expenses do not effectively reduce employee compensation below the $7.25 hourly minimum. Such circumstances would necessitate supplemental compensation to maintain compliance with minimum wage requirements.

Iowa Code 91D creates allowances for certain wage variations in specific employment scenarios. Tipped employees may receive a base rate of $4.35 per hour when combined gratuities reach the $7.25 threshold. The statute also permits employers to pay newly hired workers under age 20 a training wage of $6.35 during their first 90 days of employment, providing graduated entry into the workforce.

Employee mileage reimbursement requires thoughtful policies and consistent implementation. Iowa employers who master these aspects create fair compensation practices while maintaining regulatory compliance.

Clearly define eligible travel

Outline what counts as reimbursable mileage clearly, distinguishing between commuting (non-reimbursable) and eligible business travel. Create specific examples relevant to your industry to help employees understand when they should and shouldn't claim mileage expenses.

Maintain proper documentation

Advise on best practices for tracking mileage, such as detailed logs or mobile apps, highlighting the importance of date, purpose, and distance records. Establish standardized forms or digital tools that capture all required information to support both internal accounting needs and potential tax audits.

Regularly update policies

Recommend periodic reviews of reimbursement policies to reflect changes in IRS and Iowa state rates, ensuring compliance and fairness. Schedule annual policy reviews that coincide with IRS rate announcements to keep your reimbursement structure current.

Understand tax implications

Explain potential tax consequences for reimbursements exceeding IRS rates, ensuring both employers and employees understand reporting requirements. Provide clear guidance on how excess expense reimbursements should be reported on W-2 forms and the potential impact on employee tax obligations.

Train employees and managers

Emphasize regular training on mileage reimbursement policies and procedures to prevent confusion, compliance issues, or disputes. Develop simple reference materials that explain eligibility criteria, documentation requirements, and submission deadlines in plain language.

Conduct audits and reviews

Suggest regular internal audits of mileage reimbursement claims to maintain accuracy, avoid fraud, and ensure alignment with regulatory guidelines. Implement a verification process that includes random sampling of expense reports to validate claimed distances against mapping applications.

Integrate mileage reimbursement with payroll

Recommend connecting reimbursement processes with payroll or accounting platforms to streamline processing and minimize errors. Select software solutions that automatically apply the correct rates based on travel dates and generate appropriate tax documentation when required.

Iowa's mileage reimbursement laws, including Iowa Code §8A.363 governing state employees and the Workers' Compensation Act's mandatory provisions, establish important standards for equitable compensation of work-related travel expenses. These regulations create a structured framework that balances employee protection with employer flexibility, particularly in the private sector where general mileage reimbursement remains discretionary.

The 2025 IRS-established rate of $0.70 per mile provides a standardized benchmark for organizations developing reimbursement policies. Employers should maintain documentation of business-related travel and implement clearly defined reimbursement protocols to ensure regulatory compliance. This approach addresses both mandatory requirements under workers' compensation provisions and potential minimum wage implications when unreimbursed expenses impact employee compensation.

Brex's expense management software offers an effective solution for Iowa employers navigating these mileage reimbursement requirements. The platform streamlines the entire reimbursement process through automation, eliminating manual paperwork and reducing administrative burden. Businesses can establish customized expense policies with precise spending limits while maintaining complete documentation for compliance purposes. Brex's integration with accounting platforms creates additional efficiencies by automating data entry, reducing errors, and generating detailed financial reports. Organizations implementing Brex's expense management solution transform complex reimbursement obligations into a straightforward process that benefits both employers and employees. Sign up for Brex today.