For 2025, Maryland businesses would be wise to align their mileage reimbursement with the updated federal standard. The General Services Administration recently adjusted the rate for privately owned vehicles from $0.67 to $0.70 per mile, effective January 1, 2025. This revised figure applies to all business travel occurring in the new year and provides companies a clear benchmark when updating their travel compensation policies.

For context, the table below shows how Maryland's mileage reimbursement rates have changed over recent years

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 Maryland, 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.

The laws for mileage reimbursement in Maryland clearly separate public and private sectors. State institutions follow specific guidelines with set reimbursement requirements. Private businesses, on the other hand, have much more flexibility since Maryland law doesn't require them to match the state's approved rate. This gives companies the freedom to create compensation policies that fit their financial situation and industry standards.

Mileage reimbursement for Maryland’s state employees

Maryland's vehicle policy offers additional details that shape reimbursement practices. When state vehicles are available for use, employees who opt for their personal automobiles instead receive just $0.35 per mile, half the standard $0.70 allowance. This creates a natural incentive for utilizing the state fleet when possible.

The Maryland reimbursement structure provides another benefit for those managing state personnel. The standard mileage rate already includes vehicle insurance costs, eliminating the need for separate insurance payments when employees use personal vehicles for state business.

It's also worth noting that regular commuting between home and assigned offices stands apart from business travel. These everyday trips to and from an employee's regular workplace remain their own financial responsibility, regardless of distance traveled or method of transportation.

Workers' compensation act and mileage reimbursement

Maryland's Workers' Compensation Law extends its reach to all private sector businesses throughout the state.

When employees with work related injuries need to travel for medical treatments connected to their compensable injury, you must provide mileage reimbursement. This obligation stands as a firm requirement for all employers.

The Workers' Compensation Commission has established this reimbursement at $0.70 per mile in 2025 specifically for these situations. Maryland recognizes such travel as equivalent to business miles because these journeys stem directly from workplace injuries. The state views these trips as necessary extensions of the employment relationship rather than personal travel.

Maryland Minimum Wage Act

Maryland's Minimum Wage Act takes an indirect approach to travel expenses. The law does not specifically require employers to reimburse mileage. Rather, it focuses on ensuring that when employees incur out of pocket business expenses, these costs cannot reduce their effective pay below the state minimum wage.

This creates a subtle but important connection to mileage matters. Most employers across Maryland must meet the standard minimum wage of $15 per hour. Some local jurisdictions have established their own requirements, with Montgomery and Howard counties implementing slightly different wage standards for businesses operating within their boundaries.

Looking at how successful Maryland companies handle employee mileage reimbursement can give you practical ideas for your own business. These real-world approaches help employers maintain compliance while keeping employees satisfied with fair travel compensation:

1. Adopting the IRS standard

Many Maryland businesses choose to align closely with the federal IRS mileage rate ($0.70 per mile for 2025), simplifying expense reporting and reducing administrative complexity.

Tip: Clearly communicate annual mileage rate updates in advance, ensuring all employees are informed before changes take effect.

2. Customized policies for different roles

Companies often implement role-based reimbursement policies. For instance, sales teams traveling frequently might receive the full IRS rate, while occasional travelers might receive a reduced rate or fixed monthly allowance.

Tip: Conduct annual reviews of travel patterns to optimize your reimbursement strategy, balancing employee fairness with budget control.

3. Encouraging fleet usage to control costs

Employers with company vehicles, particularly those following Maryland's state-employee model, incentivize fleet vehicle use to reduce reimbursement costs. Employees who choose personal vehicles over available company cars might receive a lower mileage rate.

Tip: Track vehicle utilization rates carefully and clearly outline the conditions for reduced-rate reimbursements.

4. Streamlined tracking through technology

Successful Maryland businesses increasingly use automated expense management solutions to simplify mileage tracking. GPS-enabled apps automatically capture accurate mileage, significantly reducing reporting errors and administrative overhead.

Tip: Provide regular training sessions to familiarize employees with mileage tracking apps and encourage consistent usage.

5. Monitoring compliance with local wage laws

Employers operating in Montgomery and Howard counties actively monitor expense reimbursements to ensure that unreimbursed mileage expenses don't lower employee pay below local minimum wages.

Tip: Incorporate periodic wage audits as part of your financial review process, specifically checking mileage reimbursements against local minimum wage regulations.

Maryland businesses need to know how mileage reimbursement works as part of their financial planning. The state has specific rules for government employees and work-related medical travel, but private companies can create their own policies. This flexibility lets businesses develop approaches that meet both legal requirements and stay competitive in the job market.

Smart expense management goes beyond just following regulations. It actually helps keep employees happy and operations running smoothly. Companies with clear, fair reimbursement practices tend to keep their staff longer and maintain better workplace morale. As transportation costs change with the economy, having steady policies provides stability for everyone involved.

Looking for a better way to handle mileage reimbursement? Brex's expense management software makes the entire process easier. Brex automates workflows from receipt capture to approvals while automatically applying your company's expense policies. This cuts out the manual processing hassle and helps you automate mileage reimbursement. Brex brings everything together in one place: corporate cards, expense management, bill pay, travel management booking, and business banking. This approach lets you keep accurate records and reimburse employees promptly for their business travel. Sign up for Brex today.