Hawaii Vehicle Reimbursement Rules and Laws

Hawaii vehicle reimbursement: Mandatory for state employees under Code §3-10-13, optional for private firms except for Workers’ Comp.

Employers operating in Hawaii should be aware of the unique guidelines governing vehicle reimbursement. Though Hawaii does not generally require private employers to reimburse mileage, its statutes include specific provisions for both state employees and certain Workers’ Compensation scenarios. These rules intersect with the Internal Revenue Service (IRS) mileage rate and minimum wage obligations, all of which shape how companies approach compensating workers for business-related travel.

State employees in Hawaii

State employees, for instance, have a clear-cut right to mileage reimbursement if they must use their personal vehicles for work duties when publicly owned vehicles are unavailable. This mandate comes from Hawaii Code §3-10-13, which references the highest permissible rate “lawfully applicable” for that particular fiscal year.[1] Under current state practice, this typically aligns with the IRS standard rate (e.g., $0.70 per mile for the 2025 tax year). The same provision also requires regular mileage reporting for high-mileage drivers, ensuring accountability and consistent reimbursement practices. Meanwhile, private employers in Hawaii are not legally obligated to offer mileage reimbursement—unless it concerns Workers’ Compensation-related medical travel. In those cases, according to Code §12-10-25, businesses must compensate injured employees for reasonable travel costs to obtain medical care, so long as those miles go beyond normal commuting distance and are part of the most direct route.[2]

Private employers in Hawaii

Even though private companies may not be compelled to reimburse mileage in typical circumstances, many do so voluntarily to maintain fairness and morale. Some employers match the IRS rate (you can also pay any amount under it tax-free).[3] It is important to note that any mileage rate paid above the IRS standard typically counts as taxable income (though you can go over it tax-free if you use a FAVR program), so companies seeking to simplify tax compliance tend to stick to, or remain under, that benchmark. Employers should also remain mindful of how these policies interact with Hawaii’s minimum wage, which is set to reach $14.00 an hour in 2025. The principle here is straightforward: if an employee’s out-of-pocket travel expenses cause their wages to slip below the state minimum, the employer may need to make up the difference.

From a best-practices standpoint, many businesses benefit from having a uniform reimbursement policy and clearly documented procedures. Clear definitions of when travel is deemed work-related—and therefore reimbursable—help prevent conflicts. Keeping thorough, consistent records of mileage can also reduce confusion and potential legal exposure. Some employers automate the process using expense-management tools that track miles in real time, thus ensuring the data is accurate and readily auditable. Automation, though not mandatory, goes a long way in streamlining administrative duties and builds confidence among employees that their mileage is calculated fairly.

In conclusion, Hawaii’s vehicle reimbursement rules may seem relatively straightforward for companies that are used to the IRS rate, but employers must be aware of the added nuances set by state law. Whether it’s following Code §3-10-13 for state employees, adhering to Workers’ Compensation requirements, or voluntarily reimbursing private-sector travel, businesses that establish clear policies and keep proper documentation will be well-positioned to maintain compliance and foster employee satisfaction in the Aloha State.

Footnotes

1. Hawaii mileage reimbursement information. https://ramp.com/mileage-reimbursement-calculator/hawaii
2. Code §3-10-13 for privately owned vehicles. https://casetext.com/regulation/hawaii-administrative-rules/title-3-department-of-accounting-and-general-services/accounting-division/chapter-10-travel-rules/section-3-10-13-allowances-for-privately-owned-vehicles
3. Hawaii mileage reimbursement law for private companies. https://www.laborlawcenter.com/education-center/hawaii-mileage-reimbursement-law/?srsltid=AfmBOor5mwPyW5JsiDbbfgg3rqSOqLXwEkxiOOoOyFooqBVYIX1vUTSP