Arkansas Mileage Reimbursement Rules

Arkansas employers might be surprised to learn that, for normal business travel, the Natural State doesn’t legally force private employers to reimburse mileage. But there are different and necessary rules for state employees and workers’ compensation. This blog tells you what’s mandatory, what’s optional, and why you might want to go beyond the bare minimum.

Reimbursement for Arkansas State Employees

For state employees, mileage reimbursement rates are set by the chief fiscal officer of the state, and stick to IRS guidelines. As of 2025, the current rate for Arkansas state travel is $0.70 per mile [1][4][7].

What’s important is that state workers (and certain public officials) are reimbursed for using personal vehicles if they’re traveling on official state business—and that can include lodging or daily allowances if required [5].

Workers’ Compensation Rules in Arkansas

For Arkansas workers’ comp claims, mileage reimbursement isn’t optional: if an employee is injured on the job and needs to travel for medical or rehab treatments, your business must cover those miles at the approved state rate [1][4]. According to the latest guidance, the state sets that rate at $0.70/mile for 2025 [7].

Key Points

• The Arkansas Workers’ Compensation Commission classifies mileage to and from medical providers as a medical expense [4].
• Reimbursement applies to the actual miles driven.
• The injured worker must use the most economical route or mode of transportation that meets medical needs.
• Proper documentation is crucial, e.g., map mileage or a mileage log.

No matter your personal business policy for travel expenses, workers’ comp mileage is mandatory. That’s non-negotiable under Arkansas law.

Do Arkansas Private Employers Have to Pay Mileage?

Arkansas does not obligate private employers to reimburse everyday, run-of-the-mill business travel [1]. There’s no official statute saying, “You must cover your employees’ mileage.” Many companies, though, choose to do so—often matching the IRS rate or setting their own (reimbursements are tax-free up to the IRS rate, and even over the IRS rate with certain programs—see below), to keep employees happy and avoid wage issues.

Important Update: The TCJA and Unreimbursed Expenses

In years past, if you paid employees below the IRS mileage rate, they could often write off the difference on their personal taxes. But the Tax Cuts and Jobs Act (TCJA) eliminated virtually all deductions for unreimbursed employee expenses for most individuals [6]. Unless you fall into a narrow group (like certain performing artists or Armed Forces reservists), that deduction is gone.

So if your employees aren’t fully reimbursed, they generally can’t claim leftover mileage on their 1040. This might make it more meaningful to your team to reimburse them, since they can’t claim it back!

The TCJA is set to expire in 2025, but with Trump back in office, it could get extended. 

Why Offer Mileage Reimbursement in Arkansas?

Giving your employees a car allowance can make them happier workers, especially because, in Arkansas, driving long distances is often part of the job. By covering travel expenses, you foster goodwill and loyalty.

It also helps with minimum wage laws. Since Arkansas’s minimum wage is $11.00 per hour [2][3], employees who log extensive miles might see their effective pay slip below that threshold once they factor in gas and wear-and-tear. Offering reimbursement can help you avoid potential wage-related pitfalls down the road.

Finally, there’s a notable retention perk. In today’s competitive hiring markets, picking up mileage costs is a tangible way to show you value your staff—especially given that most unreimbursed expenses are no longer tax-deductible for employees [6]. By covering these travel expenses, you make a clear statement that you’re committed to supporting your team.

Reimbursement Program Options for Arkansas Drivers

If you decide to compensate your team for business travel, you’re not limited to a single “cents per mile” approach. In fact, you have a few tried-and-true mileage reimbursement programs you can consider:

Fixed & Variable Rate (FAVR)

A Fixed & Variable Rate (FAVR) plan separates your employees’ fixed costs (like insurance, depreciation) from their variable costs (fuel, maintenance). You wind up paying a data-driven reimbursement tailored to each driver’s actual expenses—and the payments can be 100% tax-free if set up properly. High-mileage drivers (like field teams and outside sales reps) often benefit from FAVR. However, be aware that there are compliance requirements—check out this blog on FAVR Reimbursement Programs and FAVR taxes explained for more details.

Tax-Free Car Allowance (TFCA)

A Tax-Free Car Allowance (TFCA) is a reimbursement program that, unlike a simple IRS standard rate allowance, can include a flat payment (e.g., a monthly stipend). It can be completely tax-free when you follow IRS guidelines. This method is a bit simpler than FAVR in terms of administration, because it doesn’t have the same compliance measures as FAVR, but it still covers employee business driving costs. Learn more about TFCA right here.

Cents per Mile (CPM)

A Cents per Mile (CPM) program is your classic approach: employees track their mileage, and you pay them “X cents” for each business mile. You can opt for the IRS standard rate—$0.70 for 2025—but you’re also free to pick a different figure. Remember: any overage above the IRS rate typically gets taxed as income for your staff. For more info on a CPM-based solution, check out Cardata’s CPM Program.

Pro tip: some Arkansas businesses find a hybrid approach works best—CPM for low-mile drivers, FAVR or TFCA for frequent travelers. There are even hybrid reimbursement and fleet programs!

Documentation for Mileage Reimbursement Programs

No matter which route you pick—FAVR, TFCA, or CPM—you’ll want good records:

1. Mileage logs, odometer readings, and a digital tracking app can ensure accuracy and honesty. This blog on mileage tracking is a great place to start.
2. Clear policies help employees know what qualifies as reimbursable (hint: commuting usually does not).
3. For workers’ comp mileage, the state expects the shortest and most economical route [4].

If you’re looking for ways to streamline management of any of these programs, you might consider software tools like Cardata’s Admin Management platform—it simplifies compliance, record-keeping, and payouts all in one place.

Summary of Arkansas Mileage Reimbursement Rules

• State employees: must be reimbursed for official travel at $0.70/mile in 2025 [7].
• Injured workers (workers’ comp): reimbursement is mandatory, $0.70/mile for medical or rehab-related travel [1][4][7].
• Private employers: you’re not legally required to reimburse mileage for everyday business driving, but offering it can help with employee satisfaction, wage compliance, and overall retention—especially because employees generally can’t deduct those unreimbursed travel expenses anymore [6](#ref6).

Au fond, your mileage reimbursement policy is a chance to show your team you respect their time—and their pocketbooks. By clarifying when you have to reimburse (workers’ comp, and if you have employees who cross over into state business) and when you want to reimburse (just good business sense), you’ll stay on the right side of the law and keep your staff happy and motivated.

References

1. Arkansas Mileage Reimbursement Laws – LaborLawCenter
2. Workstream – Arkansas Wage Index
3. Arkansas Department of Labor & Licensing – Minimum Wage Info
4. AWCC Advisory 89-2 Update – Mileage Reimbursement Rates
5. Ark. Code § 11-9-206 – Traveling Expenses for Members and Employees
6. Investopedia – Form 2106-EZ: Unreimbursed Employee Business Expenses
7. Ramp’s Arkansas Mileage Reimbursement Calculator

Disclaimer

Disclaimer: Nothing in this blog post is legal, accounting, or insurance advice. Consult your lawyer, accountant, or insurance agent, and do not rely on the information contained herein for any business or personal financial or legal decision-making. While we strive to be as reliable as possible, we are neither lawyers, accountants, or agents. For several citations of IRS publications on which we base our blog content ideas, please always consult this article: https://www.cardata.co/blog/irs-rules-for-mileage-reimbursements. For Cardata’s terms of service, go here: https://www.cardata.co/terms.