The Internal Revenue Service has established the 2025 standard business mileage rate at $0.70 per mile, which serves as the official federal benchmark for business travel expenses. Michigan employers maintain flexibility regarding reimbursement policies, as state law does not require adherence to this specific rate. However, tax experts caution that employers who opt to provide more generous reimbursements must consider tax consequences—any compensation exceeding the IRS standard rate becomes taxable income for employees.

Below you'll find Michigan mileage reimbursement rates for 2025 and previous years, which align with the IRS standard rates.

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 Michigan, 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.

Although Michigan law does not require employers to pay for employee mileage, it is important to ensure that business travel costs don't reduce wages below the minimum wage. The Fair Labor Standards Act sets these rules, and ignoring them can lead to problems for your company.

Michigan differs from the IRS in its approach to mileage rates. While the IRS suggests $0.70 per mile for 2025, Michigan has no specific rate written into state law. This gives Michigan employers the freedom to create their own reimbursement policies, whether higher or lower than what the IRS recommends.

Implications of IRS and FLSA guidelines on your business

Companies may choose whether to follow IRS guidelines, though doing so often makes tax paperwork easier. What matters more is the FLSA requirement that employee pay stays above the federal minimum wage even after subtracting work expenses. This connection between mileage payments and minimum wage rules is essential for employers who want to avoid potential legal issues.

Legal risks of non-compliance

Not meeting FLSA rules can result in serious problems for your business, such as fines, legal action, and demands for back pay. Companies should carefully consider how unpaid travel expenses might push employee wages below the minimum requirements and what this could mean for their overall legal position.

Paying attention to these regulations and how they work together helps protect your company from possible legal troubles. This approach also helps you build a workplace where employees are treated fairly and your business follows all the necessary laws.

Establishing clear and effective company mileage reimbursement policies helps Michigan businesses avoid confusion and maintain employee satisfaction. Consider these best practices to create a policy that works for your company:

Clearly define eligible travel

Specify exactly what constitutes business-related travel versus commuting or personal errands. This clarity prevents disputes about reimbursable mileage.

Choose a reimbursement rate thoughtfully

Evaluate your organization's budget alongside IRS recommendations. While you have flexibility, following the IRS standard can simplify accounting and taxation.

Document mileage accurately

Require employees to track their mileage using detailed logs or apps. Accurate records reduce errors, streamline expense reimbursements, and help protect your business during audits.

Regularly update your policy

Review and update your mileage policy annually to reflect IRS rate changes, inflation, and business needs. Communicate changes proactively to employees.

Educate employees on policy details

Ensure your staff understands reimbursement procedures, eligible expenses, and the documentation required. Clear communication improves compliance and reduces misunderstandings.

By implementing these practices, you not only protect your business legally and financially but also foster transparency, fairness, and employee satisfaction in the workplace.

Michigan's approach to mileage reimbursement exemplifies the intersection of financial pragmatism and workforce management. While state law provides employers with significant latitude in setting reimbursement policies, the most successful organizations recognize that fair compensation for business travel serves as both a retention tool and a safeguard against potential FLSA complications. The $0.70 per mile IRS standard for 2025 offers a useful benchmark, though companies must weigh the tax implications of exceeding this threshold.

Effective mileage reimbursement processes reflect an organization's understanding that employee financial security contributes directly to operational efficiency. Companies that implement clear, equitable policies demonstrate respect for their workforce's economic wellbeing while simultaneously protecting themselves from the substantial legal and financial repercussions of FLSA violations. This balanced approach represents sound fiscal management rather than mere regulatory compliance.

Brex's expense management software addresses these challenges by automating the entire reimbursement process. Brex streamlines expense reimbursement processes, approval workflows, and receipt capture while enforcing spending policies without manual intervention. Brex brings everything together in one place: corporate cards, expense management, bill pay, travel management booking, and startup banking. This approach lets you keep accurate records and reimburse employees promptly for their business travel. Sign up for Brex today.