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

Arkansas employers have flexibility when reimbursing employees who use personal vehicles for work. 

The state does not establish a universal cents-per-mile rate for most private employers, but federal tax rules still matter. 

Many employers use the IRS standard mileage rate as a benchmark, while others use reimbursement methods designed around their drivers' actual business use and vehicle costs.

Here's what Arkansas employers and drivers should know in 2026.

What Is the Arkansas Mileage Reimbursement Rate for 2026?

For private employers, Arkansas does not establish a single required mileage reimbursement rate.

The IRS publishes an optional standard mileage rate that employers commonly use as a benchmark for business driving. In 2026, that rate changed midyear.

The business mileage rate is:

• 72.5 cents per mile from January 1 through June 30, 2026
• 76 cents per mile from July 1 through December 31, 2026

The IRS originally set the 2026 rate at 72.5 cents per mile. 

In June, it announced a midyear increase to 76 cents per mile for qualifying business transportation expenses incurred on or after July 1. The IRS attributed the adjustment to recent increases in fuel prices.

As of September 2026, 76 cents per mile is the current IRS business mileage rate.

The IRS rate is optional. It does not create a mandatory Arkansas mileage reimbursement rate for private employers.

Do Employers Have to Reimburse Mileage in Arkansas?

Arkansas does not generally require private employers to reimburse employees for business mileage.

Employers can choose whether to provide mileage reimbursement and establish their own reimbursement policies, subject to any applicable employment agreements or other legal requirements.

For employers that do reimburse business driving, a clear policy should explain which trips qualify, how employees should document mileage, and how reimbursement is calculated.

Does Arkansas Require Employers to Use the IRS Mileage Rate?

No. Arkansas does not require private employers to use the IRS standard mileage rate.

The IRS standard mileage rate is an optional federal rate that can be used to calculate business vehicle costs and certain mileage reimbursements. 

For the second half of 2026, the business rate is 76 cents per mile.

Private employers in Arkansas can set their own reimbursement approach, subject to applicable wage, tax, and employment requirements. 

The IRS rate can serve as a useful benchmark, but it is not a state-mandated reimbursement rate.

What Counts as Business Mileage in Arkansas?

For federal tax purposes, business mileage generally involves driving for a legitimate business purpose.

That can include driving between work locations, visiting customers, making service calls, or traveling to an off-site business meeting.

Ordinary commuting between an employee's home and regular workplace is generally treated as personal use rather than business use. 

Travel involving temporary work locations can follow different rules depending on the circumstances.

Employers should define business and personal mileage clearly in their reimbursement policy. This helps drivers understand which trips qualify and makes mileage records easier to manage consistently.

What Mileage Records Should Employees Keep?

Mileage documentation is especially important when an employer wants reimbursements to qualify for favorable federal tax treatment.

IRS guidance requires adequate records to substantiate vehicle expenses. 

Depending on the reimbursement arrangement, records can include the date, mileage, destination, and business purpose of a trip.

Good mileage logs also make reimbursement easier to administer. 

Employees have a clear record of qualifying travel, while employers gain better visibility into the business mileage behind reimbursement payments.

For companies with field teams, mileage tracking apps can reduce the amount of manual work involved in collecting and reviewing those records.

When Is Mileage Reimbursement Tax-Free in Arkansas?

Federal IRS rules generally determine the federal tax treatment of employee mileage reimbursements.

One common approach is an accountable plan. 

Under IRS rules, an accountable plan must satisfy three basic requirements: the expense must have a business connection, the employee must adequately account for it within a reasonable period, and the employee must return excess reimbursement within a reasonable period.

When the requirements are satisfied, qualifying reimbursements generally are not treated as wages.

The reimbursement method also matters. 

Under a mileage allowance arrangement, reimbursement above the applicable federal mileage rate can create taxable wages for the excess amount, depending on how the program is structured.

FAVR follows separate IRS rules, so a FAVR payment should not simply be evaluated against the standard cents-per-mile rate.

Tax treatment ultimately depends on the reimbursement structure, documentation, and applicable IRS requirements.

What Is the Mileage Rate for Arkansas State Employees?

State employee mileage works differently from private-employer reimbursement.

Under Arkansas Code § 19-4-903, reimbursement for using a privately owned vehicle while traveling on official state business generally cannot exceed the IRS business mileage rate, unless another law applies. 

A state agency director may authorize reimbursement at a lower amount. That distinction is important in 2026.

Because the IRS business mileage rate is currently 76 cents per mile, 76 cents is generally the statutory ceiling rather than a guaranteed reimbursement rate for every Arkansas state employee. 

An agency may establish a lower rate within the limits of Arkansas law.

Arkansas travel rules also state that mileage for official use of a private vehicle is based on official miles driven, with the shortest major highway route generally determining the maximum mileage allowed.

This state travel framework is separate from the rules governing private employers.

Does Arkansas Workers' Compensation Cover Medical Mileage?

Arkansas workers' compensation can include mileage for qualifying medical travel related to a work injury.

The Arkansas Workers' Compensation Commission tells injured workers that, in a normal case, mileage is allowed for travel to receive medical treatment. 

If there is a dispute about the expenses, the Commission may determine what should be paid.

The Commission's mileage guidance also states that medical mileage reimbursement uses a floating rate corresponding with the mileage reimbursement rate authorized for Arkansas state employees.

Employers should treat workers' compensation medical travel separately from their regular employee mileage reimbursement policy because different rules and claims processes apply.

What Is the Average Car Allowance in Arkansas?

Arkansas does not establish a standard monthly car allowance for private employers.

An employer typically determines an allowance based on factors such as job requirements, expected business mileage, vehicle costs, and company policy. 

Because those factors vary considerably between employees, there is no single Arkansas allowance amount that will be appropriate for every driver.

Tax treatment is also important.

A flat car allowance that does not satisfy IRS accountable-plan requirements is generally treated differently from a qualifying accountable-plan reimbursement. 

Employers considering an allowance should evaluate both the amount and how the program is structured.

Choosing a Vehicle Reimbursement Program in Arkansas

Arkansas employers have several options when employees use personal vehicles for work.

Cents-Per-Mile (CPM) provides a set amount for each substantiated business mile. Its simplicity can make it a practical choice for employees with lower or less predictable business mileage.

Fixed and Variable Rate (FAVR) separates fixed ownership costs, such as insurance and depreciation, from variable operating costs. It can be useful for employees who drive regularly for work, particularly when vehicle costs vary across geographic areas.

Tax-Free Car Allowance (TFCA) uses an accountable-plan structure to provide reimbursement tied to substantiated business use.

Some employers use mixed programs, choosing different reimbursement approaches for different driver populations.

The right structure depends on how employees actually drive. 

A field employee covering a large territory has different vehicle costs and mileage patterns from someone who makes occasional customer visits.

Make Arkansas Mileage Reimbursement Easier to Manage

Arkansas gives private employers flexibility in how they approach mileage reimbursement. That makes good program design important.

A strong reimbursement program starts with a clear policy, reliable mileage records, an appropriate reimbursement method, and consistent administration.

Cardata helps companies design and administer mileage reimbursement programs for employees who use personal vehicles for work. 

Our fully managed programs bring together mileage capture, reimbursement calculations, payments, compliance support, and reporting.

Whether your organization uses FAVR, CPM, TFCA, or a mixed program, Cardata can help you build a program that reflects how your employees actually drive.

Talk to Cardata about building a fair, accurate, and compliant vehicle reimbursement program for your team.