The Internal Revenue Service has established a mileage reimbursement rate of $0.70 per mile for business use in Montana for 2025. This figure serves as the standard compensation rate for state employees who use personal vehicles for work-related travel.

Private sector businesses maintain flexibility regarding reimbursement practices. While many companies opt to mirror the federal standard, Montana law permits employers to implement individualized policies that may differ from the IRS benchmark.

The accompanying table provides an overview of Montana's current reimbursement rates, showing how they correspond with standard IRS rates and presenting an analysis of year-to-year rate changes.

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 Montana, 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.

Montana's mileage reimbursement laws work differently for various types of workers across the state.

The state has separate rules for different employee groups. State workers follow one set of guidelines, while employees with workplace injuries fall under different regulations.

These reimbursement rules connect closely with Montana's Minimum Wage Law, which affects how businesses must handle travel expenses. This relationship shapes how companies create their policies for paying back employees who use personal vehicles.

When employers know these specific mileage laws, they can create better reimbursement plans while making sure workers get properly paid for using their own cars for business purposes in different situations.

MCA 2-18-503 for state employees' mileage reimbursement

Montana's mileage reimbursement laws for state employees operate under statute MCA 2-18-503, which ties compensation directly to IRS guidelines. While the current standard rate sits at $0.70 per mile, the law incorporates several nuanced provisions that modify this baseline figure.

When state employees choose personal vehicles despite government transportation options being available, their reimbursement drops significantly to 48.15% of the standard IRS rate. This reduction serves as a gentle nudge toward using state-owned vehicles while still acknowledging an employee's preference for their own transportation.

The law also addresses high-volume travelers. State employees who exceed 1,000 miles in a single calendar month see their per-mile rate decrease by three cents for all travel beyond this threshold. This graduated approach recognizes the diminishing incremental costs associated with extended vehicle usage.

Code 24.29.1409 of the workers' compensation act for injured employees

Montana's Workers' Compensation Act establishes universal requirements that extend to all employment sectors, including private businesses. Code 24.29.1409 specifically mandates that employers bear responsibility for travel expenses incurred by injured workers, with mileage reimbursement forming a significant component of these obligations.

The law requires private employers to provide mileage compensation at rates identical to those established for state employees, currently set at $0.67 per mile. This alignment creates consistency across public and private sectors regarding injury-related travel compensation.

The statute does include notable exceptions that limit employer liability in certain circumstances. When an injured employee seeks treatment from medical providers not authorized by the employer or their insurance carrier, the mileage reimbursement obligation does not apply. Similarly, employers need not compensate for travel expenses when appropriate medical care exists within a 15-mile radius of the injured worker's home.

Montana minimum wage act and mileage reimbursement

Montana's Minimum Wage Law, while fundamentally focused on wage compensation standards, maintains significant implications for mileage reimbursement policies across the state.

The law creates an important intersection between travel expenses and minimum hourly earnings. Employers in Montana must provide mileage reimbursement in situations where failing to compensate for vehicle usage would effectively reduce an employee's hourly earnings below the state-mandated minimum of $10.55 per hour. This provision ensures workers do not subsidize business travel costs at the expense of their basic guaranteed income.

Montana's wage regulations also clarify what constitutes compensable work time. The law requires payment for all "hours worked," a designation that encompasses preparation activities, time spent traveling for business purposes, attendance at required meetings, and participation in job-related training sessions. This inclusive definition of compensable time directly influences when mileage reimbursement becomes necessary to maintain minimum wage compliance.

The law further stipulates that gratuities received by employees cannot be factored into minimum wage calculations. This prohibition on counting tips toward the hourly minimum amplifies the importance of proper expense reimbursement, as employers cannot offset travel costs against discretionary income provided by customers.

Note: Montana law permits businesses with gross annual sales of $110,000 or less that fall outside Fair Labor Standards Act jurisdiction to pay employees at a reduced rate of $4.00 per hour. This alternative wage standard does not apply when employees engage in interstate commerce activities, in which case employers must provide compensation at the higher of the federal or Montana minimum wage rates.

Implementing thoughtful employee mileage reimbursement practices helps Mississippi businesses reduce administrative headaches while keeping employees satisfied. Clear policies ensure compliance with relevant laws like the Workers' Compensation Act and upcoming minimum wage changes. These practices also promote financial transparency and help businesses budget more effectively for travel expenses.

Establish a clear mileage reimbursement policy

Create a formal written expense policy that clearly outlines what qualifies as reimbursable business mileage versus regular commuting. Your document should specify whether you follow the IRS rate ($0.70 per mile for 2025) or use a custom rate, and explain how this aligns with Mississippi's approach for state employees under Section 25-3-41. Include submission deadlines for expense claims, required documentation, and your company's approval process. Make this policy easily accessible in employee handbooks and reference materials.

Use mileage tracking software or apps

Provide employees with reliable tracking tools to simplify mileage reporting. Look for apps with automatic GPS tracking that can distinguish between business and personal trips with minimal effort. These digital solutions create consistent documentation that helps satisfy both IRS requirements and Mississippi's Workers' Compensation obligations if employees need medical treatment for workplace injuries. Digital tracking also produces reports that make reimbursement processing faster and more accurate.

Ensure accurate and timely record-keeping

Require employees to maintain detailed logs showing the date, starting location, destination, business purpose, and total miles for each trip. Establish a consistent schedule for submitting these records—monthly reporting works well for most Mississippi businesses. Clearly communicate what supporting documentation employees need to include, such as receipts for related expenses like parking or tolls. Store these records for at least three years to align with IRS guidelines and protect your business in case of audit.

Communicate clearly and frequently with employees

Make sure all employees understand your mileage reimbursement procedures, especially as Mississippi transitions to its new minimum wage law in 2025. Include mileage policy training during employee onboarding and offer refresher sessions when policies change. Create simple reference guides explaining eligibility, submission procedures, and expense reimbursement timelines. When employees understand the process, they're more likely to submit accurate, timely expense reports and less likely to have concerns about fair compensation.

Regularly review and update your mileage policy

Schedule annual reviews of your mileage reimbursement policy to ensure it remains current with IRS rates, which typically change each January. This is particularly important as Mississippi implements Senate Bill 2172, establishing the state's first minimum wage law. Regular updates demonstrate your commitment to fair compensation practices while preventing potential compliance issues. These reviews also provide an opportunity to assess whether your current approach meets both your business needs and employee expectations in Mississippi's evolving employment landscape.

Mississippi's mileage reimbursement laws combine federal standards with state-specific regulations. State employees receive $0.70 per mile when government vehicles are unavailable and $0.21 per mile otherwise. The Workers' Compensation Act extends requirements to private employers for work-related injuries, with exemptions for businesses with fewer than five employees. The upcoming state minimum wage increases to $12.00 in 2025 and $15.00 in 2027 will further shape compensation practices.

Proper reimbursement policies benefit both parties in the employment relationship. Employees avoid bearing business costs inappropriately, leading to increased job satisfaction and retention. Employers who implement fair and transparent practices demonstrate their commitment to equitable treatment while ensuring compliance with applicable regulations.

Brex's expense management software offers a streamlined solution for businesses managing these requirements. Brex automates the entire reimbursement process from submission to payment, including approvals, receipt capture, and policy enforcement. By integrating corporate cards, expense tracking, bill payment, travel management booking, and startup banking into one place, companies can simplify operations while maintaining consistent policy application. Sign up for Brex today to transform your organization's approach to expense management while maintaining compliance with Mississippi's reimbursement regulations.