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

When employees use their personal vehicles for work, employers need a clear way to handle business mileage. In Connecticut, that starts with understanding which reimbursement rules apply and which mileage rate to use.

Connecticut does not generally require private employers to reimburse employees for ordinary business mileage, and the state does not set a specific mileage rate for private employers. Businesses that choose to reimburse employees can use the IRS standard mileage rate as a benchmark.

Different rules apply to Connecticut state employees and workers’ compensation-related medical travel. And with the federal mileage rate changing midway through 2026, there are two rates to keep track of this year.

Here’s what Connecticut employers need to know for 2026.

What Is the Mileage Reimbursement Rate in Connecticut for 2026?

Connecticut does not set a separate mileage reimbursement rate for private employers. 

Employers that choose to reimburse employees for business driving can use the IRS standard mileage rate as a benchmark.

The IRS set the 2026 business mileage rate at 72.5 cents per mile for travel from January 1 through June 30, 2026. 

A mid-year IRS update increased the rate to 76 cents per mile for business travel on or after July 1, 2026. The IRS cited recent increases in fuel prices as the reason for the adjustment.

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

Private employers are not required to use the IRS rate.

Depending on their workforce and driving patterns, employers can also use a Fixed and Variable Rate (FAVR) program or another accountable reimbursement arrangement. 

FAVR reimburses employees for the business-required fixed and variable costs associated with owning and operating a personal vehicle for work.

Under a CPM program, amounts paid above the applicable federal mileage rate generally must be returned or treated as taxable wages when accountable plan requirements apply. 

FAVR follows separate IRS requirements and should not be evaluated solely against the standard mileage rate.

Do Employers Have to Reimburse Mileage in Connecticut?

No. Connecticut does not generally require private employers to reimburse employees for ordinary business mileage. 

Employers can choose whether to reimburse employees who use personal vehicles for work and how to structure that reimbursement.

If an employer does reimburse business mileage, it can use the IRS standard mileage rate as a benchmark, but private employers are not required to use that rate.

Employers should have a clear mileage reimbursement policy that explains which business trips qualify, how employees should document mileage, and how reimbursements are calculated. 

Reimbursements intended to receive tax-free treatment must also meet applicable IRS accountable plan requirements.

When Is Mileage Reimbursement Tax-Free in Connecticut?

Connecticut employers generally follow federal IRS rules when determining how mileage reimbursements are treated for tax purposes.

Under an IRS accountable plan, reimbursements generally do not have to be included in an employee’s taxable wages when three requirements are met:

• The expense has a business connection.
• The employee adequately accounts for the expense within a reasonable period.
• The employee returns any excess reimbursement within a reasonable period.

For mileage, IRS recordkeeping guidance generally calls for records documenting business mileage, the date and destination of the trip, and its business purpose.

Using the IRS standard mileage rate alone does not make a reimbursement tax-free. A CPM program can provide tax-free reimbursement for substantiated business mileage up to the applicable IRS rate when accountable plan requirements are met.

FAVR programs follow separate IRS requirements. Tax-Free Car Allowance (TFCA) programs must also be structured to meet applicable accountable plan requirements to qualify for tax-free treatment.

Simply labeling a payment as mileage reimbursement or a car allowance does not make it tax-free.

What About State Employees?

Connecticut has specific rules for state employees who use personal vehicles for official state business. 

Reimbursement is governed by state travel regulations and, for many employees, applicable collective bargaining agreements. 

The Connecticut Department of Administrative Services requires personal vehicle use to be authorized before travel and directs employees to use the mileage rate established by the Office of the State Comptroller.

For many state employees, the mileage rate is tied to the federal General Services Administration (GSA) rate. 

The Office of the State Comptroller confirmed that the rate increased to 72.5 cents per mile for travel on or after January 29, 2026 for specified bargaining units, non-represented employees, and other covered executive branch employees.

Connecticut issued another Office of the State Comptroller mileage reimbursement update in August 2026 following the federal mid-year rate change. 

Because state employee reimbursement can depend on an employee’s bargaining unit and applicable travel rules, employees should confirm the current rate that applies to them rather than assuming every state employee follows the IRS effective dates.

State travel rules also generally require employees using personal vehicles for authorized state business to subtract their normal round-trip commute from reimbursable mileage, subject to applicable exceptions and collective bargaining provisions.

What Counts as Business Mileage for Tax Purposes?

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 Connecticut?

There is no standard car allowance that Connecticut employers are required to provide. 

Employers typically set car allowances based on factors such as job requirements, expected business mileage, and company policy.

Nationally, Cardata’s internal data shows that average monthly car allowances increased from about $651 in January 2025 to roughly $706 by September 2025, an increase of about 8% over that period. (Source: Cardata internal data.)

Actual vehicle expenses can vary considerably by driver, location, vehicle, and driving patterns. As a result, two employees receiving the same flat allowance may have very different expenses.

Traditional flat car allowances are generally treated as taxable wages. 

When reimbursements are structured to meet IRS accountable plan requirements, qualifying amounts can generally be excluded from taxable wages. 

Mileage-based reimbursement programs offer another approach by tying reimbursement more closely to documented business driving.

Are There Any Mileage Reimbursement Laws in Connecticut?

Connecticut does not generally require private employers to reimburse employees for ordinary business mileage. Workers’ compensation medical travel is an important exception.

Under Connecticut General Statutes § 31-312, employers must provide transportation or reimburse qualifying transportation costs when an employee travels for medical treatment, examination, or testing related to a workplace injury under the circumstances described in the statute. 

For travel by private motor vehicle, the statute ties reimbursement to the federal privately owned vehicle mileage rate established under the Federal Travel Regulation.

The Connecticut Workers’ Compensation Commission confirms that the reimbursement rate is 72.5 cents per mile for eligible travel on or after January 1, 2026, and 76 cents per mile for eligible travel on or after July 1, 2026.

The Commission also confirms that the July rate change applies to all claimants regardless of injury date.

Outside of workers’ compensation medical travel and state employee travel rules, Connecticut private employers generally have flexibility in how they structure mileage reimbursement policies, while still considering applicable wage-and-hour and federal tax requirements.

Managing Mileage Reimbursement in Connecticut

Connecticut 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.