Alaska Mileage Reimbursement Rate 2026: Laws, IRS Rate & Employer Rules

Alaska does not generally require private employers to reimburse employees for business mileage, and the state does not set a separate mileage rate for private employers.

Employers that choose to reimburse mileage can use the IRS standard mileage rate as a benchmark. Different rules apply to Alaska state employees and workers’ compensation-related travel.

Here’s what employers need to know about Alaska mileage reimbursement in 2026.

What Is the Mileage Reimbursement Rate in Alaska for 2026?

Alaska does not set a separate mileage reimbursement rate for private employers. Like most states, it generally relies on the IRS standard mileage rate as a reference point.

The IRS set the 2026 business mileage rate at 72.5 cents per mile effective January 1, 2026. 

A mid-year IRS update increased the rate to 76 cents per mile for business travel on or after July 1, 2026. Alaska's Department of Administration also updated its privately owned vehicle mileage rate effective July 1, 2026.

For employers using a Cents-Per-Mile (CPM) program based on the IRS standard mileage rate, this figure provides a straightforward benchmark for reimbursing documented business mileage. 

Employers aren't required to use this rate, though. 

Depending on workforce size and driving patterns, some use Fixed and Variable Rate (FAVR) programs or other accountable reimbursement arrangements that reimburse employees for the real, business-required cost of owning and operating a personal vehicle for work.

Amounts paid above the IRS standard mileage rate under a CPM program may be treated as taxable income. FAVR follows separate IRS requirements and shouldn't be evaluated solely against the standard rate.

Do Employers Have to Reimburse Mileage in Alaska?

Alaska does not generally require private employers to reimburse employees for ordinary business mileage or other business travel expenses.

Alaska does not generally require private employers to reimburse ordinary business mileage. 

However, employers should still consider applicable wage-and-hour requirements when employees are required to cover business-related vehicle expenses. 

As of July 1, 2026, Alaska’s minimum wage is $14.00 per hour.

When Is Mileage Reimbursement Tax-Free in Alaska?

Alaska employers generally follow federal IRS rules when determining the tax treatment of mileage reimbursements.

Under an IRS accountable plan, reimbursements can generally be excluded from taxable wages when three requirements are met: the expense has a business connection, the employee adequately accounts for it within a reasonable period, and any excess reimbursement is returned within a reasonable period.

For mileage specifically, adequate records generally include the date, number of business miles driven, destination, and business purpose of the trip.

Staying at or below the IRS standard mileage rate isn't what makes a CPM reimbursement tax-free by itself; it's the accountable plan structure and proper substantiation that do that. 

A CPM program can provide tax-free reimbursement for substantiated business mileage up to the applicable IRS rate, but only when it's paired with adequate documentation. 

CPM is generally simpler for occasional drivers, while FAVR can make more sense for drivers who cover meaningful mileage regularly and face real regional differences in vehicle costs. 

FAVR and Tax-Free Car Allowance (TFCA) programs follow their own IRS requirements and can also remain tax-free when the program and driver meet those requirements. `

Simply calling a payment a mileage reimbursement or car allowance doesn't automatically make it tax-free.

What About State Employees?

Alaska state employees may receive mileage reimbursement when using a privately owned vehicle for official state business under Policy AAM 60.140 of the Alaska Administrative Manual. 

Under Alaska Statute 39.20.160, mileage reimbursement is subject to rates and rules established by the commissioner of administration. 

The state also limits reimbursement to what the lowest available commercial transportation alternative would have cost when applicable.

If a state employee chooses to drive a personal vehicle instead of using a more economical option, like a rental car, reimbursement may be capped at the lower-cost alternative. 

As with most reimbursement frameworks, ordinary commuting to a regular workplace doesn't qualify.

What Counts as Business Mileage for Tax Purposes in Alaska?

For federal tax purposes, business mileage generally includes travel for a business purpose, while commuting between home and a regular workplace is generally personal. Employers should document business mileage carefully when reimbursements are paid under an IRS accountable plan.

Common examples of business mileage include:

• Driving from an office to a client site. Travel from a regular workplace to meet a client or customer is generally considered business travel.
• Traveling between job sites. Miles driven from one work location to another during the workday are generally business-related.
• Making deliveries or service calls. Mileage driven to deliver products, visit customers, or perform work at another location can generally qualify.
• Traveling to a conference or off-site meeting. These trips may qualify depending on the circumstances, including where the trip begins.
• Driving from home to a regular workplace. This is generally considered personal commuting mileage rather than business mileage.

Travel to a temporary work location can sometimes qualify as business mileage, depending on the employee’s regular work location and the circumstances of the trip.

The distinction matters because tax-free mileage reimbursement generally requires employees to substantiate their business driving. 

Under IRS recordkeeping guidance, employees should maintain records that document details such as business mileage, dates, destinations, and the business purpose of their trips.

What Is the Average Car Allowance in Alaska?

There's no standard car allowance amount that Alaska employers are required to provide, and there isn't a single "average Alaska allowance" that makes sense to benchmark against, since driving costs vary widely between Alaska's urban centers and its more remote communities. 

Car allowances are typically set by individual employers based on job requirements, expected business mileage, and company policy.

Nationally, the average car allowance rose to just over $700 per month in 2025, based on aggregated Cardata data from January 1 through October 31, 2025. 

This is up from the commonly reported average of approximately $575 to $600 per month in 2024. (Source: Cardata aggregated internal data, 2025.)

That's a national figure, and it doesn't necessarily reflect what's appropriate for a given Alaska driver. 

Two employees receiving the same flat allowance can have very different real-world costs, which is one of the more common limitations of a flat monthly car allowance.

Traditional flat car allowances are generally treated as taxable income unless they're structured to meet IRS accountable plan requirements. 

Mileage-based reimbursement programs can offer an alternative by tying payments more directly to documented business driving.

Are There Any Mileage Reimbursement Laws in Alaska?

Alaska does not generally require private employers to reimburse ordinary business mileage. Workers' compensation is a notable exception.

Under 8 AAC 45.084, employers must pay or reimburse eligible travel expenses when an injured employee travels for necessary medical treatment. These expenses can include mileage for a privately owned vehicle, as well as qualifying meals and lodging.

For in-state medical travel, the Alaska Workers’ Compensation Division directs employers and employees to the Alaska Department of Administration’s rate table for the current privately owned vehicle mileage rate. 

The Department of Administration updated that rate effective July 1, 2026, following the mid-year mileage rate change.

As a result, eligible workers’ compensation medical travel by private vehicle follows the applicable state mileage rate in effect on the date of travel.

Outside of workers' compensation and state employee travel, Alaska employers generally have flexibility in how they structure mileage reimbursement policies, subject to Alaska's wage and hour rules and applicable federal tax rules.

Managing Mileage Reimbursement in Alaska

Alaska does not set a separate mileage reimbursement rate for private employers, giving businesses flexibility in how they reimburse employees for business driving. 

Whatever approach an employer chooses, clear policies, accurate mileage records, and consistent administration can help keep reimbursements organized and aligned with applicable IRS requirements.

Cardata helps businesses manage mileage reimbursement with automated mileage tracking, payments, compliance support, and ongoing program management. 

See how Cardata can help you build a reimbursement program that works for your drivers and your business.