New Jersey has set its 2025 mileage reimbursement rate for state employees at $0.70 per mile, matching the current IRS standard rate. While this rate is mandatory for public sector workers under state law, private employers face no such requirement. Many private businesses nevertheless opt to follow the IRS guidelines. The rate comparison table below shows these figures alongside historical trends.

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 New Jersey, 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.

New Jersey state law, specifically Section 1 of P.L.1943, requires government agencies to reimburse employees who use their personal vehicles for work-related travel. The current rate stands at $0.70 per mile, a figure established by the Internal Revenue Service. Private sector employers, however, enjoy considerably more latitude in establishing their reimbursement practices.

The following analysis examines the key laws and regulations governing mileage reimbursement throughout New Jersey for both public and private entities.

Mileage reimbursement policies for state employees

New Jersey requires all state agencies to reimburse employees for mileage incurred while using personal vehicles for work purposes, according to Circular 20-04-OMB. The directive establishes a reimbursement rate of $0.70 per mile and further stipulates that state employees must be compensated for any parking fees and toll expenses incurred during official travel.

The legal foundation for this policy traces back to Section 1 of P.L.1943, c.188 (C.52:14-17.1), which explicitly requires the state to reimburse employees at the federal Internal Revenue Service rate when they use their personal vehicles while performing official duties. This longstanding statute ensures consistent compensation standards across all state departments and agencies.

New Jersey’s workers' comp law and its implications on mileage reimbursement

New Jersey's Workers' Compensation Law (Section 34:15-1) protects employees who get hurt at work. The law doesn't make employers pay for travel to medical appointments. However, it does require businesses to cover important medical benefits like treatment, prescriptions, and hospital care.

When employers understand these legal requirements, they can clearly explain to their workers what benefits are covered and what aren't. This helps avoid confusion and makes sure the company follows New Jersey's worker protection laws.

New Jersey minimum wage act and mileage reimbursement

The New Jersey Wage Act establishes minimum wage standards, with the general minimum wage set to reach $15.49 per hour in 2025. The legislation creates a differentiated structure that varies by employment category, which can inform employer decisions about mileage reimbursement practices, even though the Minimum Wage Act does not explicitly address mileage compensation. Agricultural workers currently earn a minimum of $13.40 per hour under a gradual increase schedule that will ultimately reach $15 hourly by 2027. Meanwhile, tipped employees must receive a base wage of at least $5.62 per hour, with employers permitted to claim tip credits of up to $9.87 to satisfy their minimum wage obligations.

Note: The New Jersey Department of Labor and Workforce Development (NJDOL) establishes these rates.

New Jersey vs federal mileage reimbursement rules

The IRS has set the standard mileage rate for 2025 at $0.70 per mile, which gives employers a benchmark for tax-free reimbursements. New Jersey handles this differently depending on whether you work for the government or a private company.

New Jersey government employees get reimbursed exactly at the IRS rate. Private employers, though, don't legally have to reimburse mileage at all. This means private businesses need to create their own reimbursement policies, and it's up to them to make systems that employees see as fair and clear.

Even though employee mileage reimbursement seems straightforward, many New Jersey employers make avoidable mistakes that lead to employee frustration, compliance problems, and unnecessary costs. By recognizing and addressing these common pitfalls, you can maintain employee trust while ensuring your reimbursement practices remain efficient and legally sound.

Mistake #1: Having an unclear or nonexistent policy

Without a clear expense policy, employees don't know which trips qualify for reimbursement or how to submit their claims properly. This creates confusion about whether commuting to clients, travel between office locations, or trips to work-related events are covered. Some employees might over-claim while others don't request legitimate reimbursements they deserve.

Solution

Create a written policy that specifically details what qualifies for reimbursement in New Jersey, including examples relevant to your business. Make this policy easily accessible in employee handbooks and onboarding materials. When changes occur, such as rate adjustments when the IRS updates its standard, communicate these promptly through company-wide emails or meetings.

Mistake #2: Poor or inconsistent mileage tracking

Many New Jersey employers rely on honor-system reporting without verification, creating opportunities for both innocent errors and deliberate inflation of mileage expense claims. Inconsistent tracking also causes administrative headaches when trying to sort out legitimate business travel from personal trips or regular commuting.

Solution

Implement a standardized tracking method for all employees who travel for work. Consider providing access to mileage tracking apps that use GPS to automatically record trips and calculate distances. Establish a regular verification process where managers review submitted mileage against reasonable expectations for the reported business activities. This protects both your company from overpayment and employees from potential audit issues.

Mistake #3: Incorrect tax reporting or misclassification

Many New Jersey employers don't realize that exceeding the IRS standard rate ($0.70 per mile for 2025) makes the excess amount taxable compensation. Others fail to properly document reimbursements, creating tax liability for employees or exposing the company to IRS penalties. This mistake often goes unnoticed until tax season creates problems for everyone involved.

Solution

Stay current with IRS guidelines regarding mileage reimbursement taxation. If you pay above the standard rate, clearly identify the excess as taxable wages on pay statements. Work with your accounting team to ensure proper documentation and reporting of all reimbursements. Consider consulting with a tax professional familiar with New Jersey's specific requirements to review your reimbursement practices annually.

Mistake #4: Delaying reimbursement payments

Some employers batch mileage reimbursements quarterly or process them only when convenient, forcing employees to temporarily cover business expenses out of pocket. This practice particularly impacts lower-wage workers in New Jersey, where the cost of living is high. Extended delays can even potentially violate New Jersey wage payment laws if reimbursements are considered part of compensation.

Solution

Establish a consistent, predictable schedule for processing mileage reimbursements. Many successful New Jersey companies process travel expenses biweekly or monthly alongside regular payroll cycles. Communicate clearly how long expense reimbursement typically takes and who employees should contact if they experience delays. For employees who travel extensively, consider implementing a process to prevent personal financial strain.

New Jersey handles mileage reimbursement differently for public and private employers. State employers must pay the IRS rate of $0.70 per mile for 2025 because state law requires it, but private businesses have no such legal obligation. This situation connects with other workplace rules like minimum wage and workers' compensation, creating a somewhat complicated landscape for employers.

Even without legal requirements, private employers in New Jersey benefit from having clear, consistent expense reimbursement policies. When companies follow the federal IRS guidelines, they make accounting simpler and show fairness to employees using their own cars for work. It's a good idea to write down these policies clearly, share them openly with employees, and update them yearly when IRS rates change.

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