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

Maryland employers have a lot of flexibility when it comes to mileage reimbursement. The state does not generally set a required mileage rate for private employers, so businesses can choose a reimbursement approach that makes sense for their drivers.

The IRS standard mileage rate gives employers a useful benchmark. In 2026, that means keeping track of two rates: 72.5 cents per mile from January 1 through June 30, and 76 cents per mile from July 1 through December 31.

Those rates are optional for private employers. They do not create a Maryland requirement to reimburse employees at the IRS rate.

Here’s what Maryland employers and drivers should know about mileage reimbursement in 2026, including IRS rates, tax treatment, state employee rules, Workers’ Compensation, and reimbursement options.

What Is the Maryland Mileage Reimbursement Rate for 2026?

There is no single Maryland mileage reimbursement rate that applies to private employers.

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

For 2026, the IRS business mileage rates are:

• January 1 through June 30: 72.5 cents per mile
• July 1 through December 31: 76 cents per mile

The IRS initially established the 72.5-cent rate in Notice 2026-10 and later increased the rate to 76 cents for the second half of the year. The IRS standard mileage rate is optional.

For employers using a Cents-Per-Mile (CPM) program, the IRS rate can provide a straightforward benchmark for reimbursing documented business mileage.

Employers can also use other reimbursement methods, including Fixed and Variable Rate (FAVR), Tax-Free Car Allowance (TFCA), or a mixed reimbursement approach.

Do Employers Have to Reimburse Mileage in Maryland?

Maryland does not generally require private employers to reimburse employees at a specific mileage rate.

That gives employers room to choose how they reimburse employees who use personal vehicles for work. 

Reimbursement obligations can still come from an employment agreement, collective bargaining agreement, company policy, or another law that applies to a particular situation.

Employers with drivers in multiple states should pay particular attention to this distinction because employee expense reimbursement requirements vary by state.

Whatever method an employer chooses, a clear mileage reimbursement policy can define which trips qualify, what employees need to document, how reimbursement is calculated, and when payments are made.

Is Mileage Reimbursement Tax-Free in Maryland?

Mileage reimbursements can generally be excluded from federal taxable wages when the arrangement satisfies IRS accountable-plan requirements.

Under IRS Publication 463, an accountable plan generally requires expenses to have a business connection, employees to adequately account for those expenses within a reasonable period, and employees to return excess reimbursements within a reasonable period.

For business driving, employees should keep records that support details such as the mileage, date, destination, and business purpose of each trip.

Paying the IRS mileage rate by itself does not automatically make a reimbursement tax-free. The reimbursement arrangement and supporting records also need to meet the applicable IRS requirements.

FAVR works differently from a standard mileage allowance. 

A properly structured FAVR program reimburses the real, business-required fixed and variable costs of owning and operating a personal vehicle for work. 

The IRS provides separate requirements for FAVR plans, including limits on the cost of the standard automobile used to calculate the allowance.

What Counts as Business Mileage in Maryland?

Business mileage generally involves driving for a legitimate work purpose rather than an employee’s ordinary commute.

Driving from an office to visit a customer, traveling between work locations during the day, making service calls, or visiting job sites can generally qualify as business transportation.

Regular commuting works differently. Driving between home and a regular workplace is generally considered personal commuting for federal tax purposes.

For example, imagine an employee drives from home to their regular Baltimore office and then leaves the office to visit a customer. The first trip is generally commuting, while the trip from the office to the customer is generally business transportation.

IRS Publication 463 provides additional rules for situations involving temporary work locations, multiple workplaces, and qualifying home offices.

Accurate mileage records help employers make these distinctions consistently and support the tax treatment of qualifying reimbursements.

What Is the Maryland State Employee Mileage Rate for 2026?

Maryland government employees follow separate travel policies from private-sector employees, and the applicable policy can depend on the branch or agency.

For employees covered by Maryland Department of Budget and Management policy, the state published a full privately owned vehicle reimbursement rate of 72.5 cents per mile effective January 1, 2026. 

The corresponding half rate was 36.25 cents per mile.

DBM has since published an updated privately owned vehicle reimbursement schedule effective July 1, 2026. Its Fleet Management Services page directs state employees to that current schedule.

The half-rate rule applies in certain circumstances under Maryland fleet policy. For example, employees covered by that policy can receive the half rate when they choose to use a privately owned vehicle even though a state vehicle is available.

The Maryland Judiciary follows its own policies. Maryland Courts has separately confirmed that its mileage rate for business travel increased to 76 cents per mile for occurrences beginning on or after July 1, 2026.

These state government policies should not be confused with the rules for private businesses. They do not establish a mileage reimbursement rate that Maryland private employers have to pay.

What Are Maryland’s Workers’ Compensation Mileage Rules?

Maryland Workers’ Compensation has separate mileage rules for qualifying travel associated with a workplace injury.

The Maryland Workers' Compensation Commission lists a mileage reimbursement rate of 72.5 cents per mile, effective January 1, 2026. That figure matches the IRS's initial 2026 business mileage rate.

The Commission updates this rate periodically rather than on a fixed annual schedule, so employers should check the Commission's published rate directly before relying on a specific figure for a given claim date.

Workers’ Compensation mileage is a specific category of reimbursement and should be kept separate from an employer’s regular mileage reimbursement program.

What Is the Average Car Allowance in Maryland?

There is no official Maryland average car allowance for private employers.

A traditional car allowance usually provides an employee with a fixed amount for using a personal vehicle for work. 

That approach can be simple to understand, but vehicle costs can vary considerably based on how much someone drives, where they live, and the type of vehicle they need for their job.

Tax treatment also depends on how the allowance is structured. Employers should consider IRS accountable-plan requirements rather than assuming a fixed monthly allowance automatically qualifies for tax-free treatment.

Which Mileage Reimbursement Program Works for Maryland Employers?

The right reimbursement method depends on how employees drive, where they work, and what their jobs require.

Cents-Per-Mile (CPM) reimburses the real, business-required cost of owning and operating a personal vehicle for work using a set rate for substantiated business mileage. It can be a practical option for employees who drive occasionally or have lower business mileage.

Fixed and Variable Rate (FAVR) separates fixed and variable vehicle costs. Fixed costs can include insurance, depreciation, license, and registration. Variable costs can include fuel, maintenance, tires, and oil. This structure allows reimbursement to account for differences in mileage and localized vehicle costs.

Tax-Free Car Allowance (TFCA) can use fixed, mileage-based, or combined reimbursement components to reimburse the real, business-required costs employees incur when using personal vehicles for work.

Employers with different types of drivers can also use a mixed approach. For example, a company might use FAVR for regular high-mileage drivers and CPM for employees who drive less frequently.

Managing Mileage Reimbursement in Maryland

Maryland employers have flexibility in how they structure mileage reimbursement. 

The goal is to choose an approach that reflects how employees actually drive while keeping reimbursement, documentation, and administration clear.

That becomes especially important when a company has drivers with different mileage levels, operates across multiple states, or needs to manage reimbursement across Finance, HR, and Operations.

Cardata helps businesses design and manage mileage reimbursement programs that fit how their employees actually drive. 

Our fully managed programs bring together mileage capture, reimbursement calculations, payments, reporting, and compliance support, so Finance, HR, and Operations teams can manage reimbursement in one place.

Talk to Cardata to explore a mileage reimbursement program built around your drivers, business needs, and budget.