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If employees use their personal vehicles for work in Virginia, there is no single mileage reimbursement rate that every private employer is required to pay.
Many employers use the IRS standard mileage rate as a benchmark. In 2026, that rate changed mid-year.
The optional business standard mileage rate is 72.5 cents per mile for January 1 through June 30, 2026, and 76 cents per mile beginning July 1, 2026.
The IRS says the mid-year adjustment resulted from recent increases in fuel prices.
Virginia also has separate mileage rules for official state travel and workers’ compensation. Here is what employers and employees should know about Virginia mileage reimbursement in 2026.
What Is the Virginia Mileage Reimbursement Rate for 2026?
Virginia does not set a standard mileage reimbursement rate that every private employer must use.
For employers that choose to reimburse employees for business driving, the IRS optional standard mileage rate is a common benchmark.
There are two IRS business mileage rates for 2026:
- January 1 through June 30, 2026: 72.5 cents per business mile
- July 1 through December 31, 2026: 76 cents per business mile
The IRS increased the rate mid-year because of recent increases in fuel prices.
For employee mileage allowances, the revised rate applies when the allowance is paid on or after July 1 and relates to transportation expenses paid or incurred by the employee on or after July 1.
The IRS standard mileage rate is optional. It provides employers with a federal benchmark for business driving costs rather than establishing a mandatory Virginia reimbursement rate.
The IRS also allows taxpayers in some situations to use actual vehicle expenses instead of the standard mileage method.
Do Employers Have to Reimburse Mileage in Virginia?
Virginia does not have a general law establishing a mandatory per-mile reimbursement rate for ordinary business driving by private-sector employees.
That gives private employers flexibility in how they structure mileage reimbursement.
Employers should still account for employment agreements, collective bargaining agreements, written reimbursement policies, and any rules that apply to a particular workforce or type of travel.
A company policy can also create its own expectations around reimbursement.
For employers with employees who regularly use personal vehicles for work, a written mileage reimbursement policy can help define which trips qualify, how mileage should be documented, which reimbursement method applies, and when payments are made.
Virginia also has separate rules for government travel and workers’ compensation, so those situations should be treated independently from ordinary private-sector business mileage.
When Can Mileage Reimbursement Be Tax-Free?
Mileage reimbursement can generally be excluded from an employee's federal taxable wages when the reimbursement arrangement satisfies IRS accountable-plan requirements.
According to IRS Publication 463, an accountable plan generally requires that:
- The expense must have a business connection.
- The employee must adequately account for the expense within a reasonable period.
- The employee must return any excess reimbursement or allowance within a reasonable period.
When those requirements are met, qualifying reimbursements generally are not treated as employee wages.
Employees also need adequate records supporting business driving. IRS guidance requires documentation sufficient to substantiate expenses, including details such as the date, place or destination, mileage, and business purpose.
The reimbursement rate by itself does not determine whether a payment is tax-free. Program structure, substantiation, and the handling of excess payments matter too.
What Counts as Business Mileage in Virginia?
Business mileage generally means driving for a legitimate business purpose rather than an employee's ordinary commute between home and a regular workplace.
Examples can include traveling from an office to a customer location, driving between job sites during the workday, making deliveries or service calls, and traveling to qualifying temporary work locations.
Ordinary commuting between an employee's home and regular workplace is generally treated as personal travel under federal tax rules.
IRS Publication 463 also contains specific rules for temporary work locations and qualifying home offices.
Clearly defining business versus personal vehicle use can make mileage reporting easier for employees while helping employers calculate reimbursements consistently.
How Does Mileage Reimbursement Work for Virginia State Travel?
Virginia has a separate reimbursement framework for official state business.
Under Virginia Code § 2.2-2823, people traveling on state business can be reimbursed for necessary travel expenses.
When private transportation is used, reimbursement is based on the rate established under Virginia’s current travel rules and appropriation act.
For a personally owned automobile that is cost justified, or when a state-owned vehicle is not available, Virginia’s travel policy uses the current IRS mileage rate for the first 15,000 miles of eligible use in a fiscal year. As of July 1, 2026, that rate is 76 cents per mile.
A different rate can apply when a state vehicle is available and an employee chooses to use a personal vehicle for convenience.
Virginia policy ties that reimbursement to the applicable GSA privately owned vehicle rate.
As of July 1, 2026, the federal rate for using a personal automobile when a government vehicle was authorized and available is 23.5 cents per mile.
Virginia’s Department of Accounts also publishes separate travel reimbursement forms for January 1 through June 30, 2026 and July 1, 2026 forward, reflecting the mid-year rate change.
The statute treats some expenses separately from mileage.
Storage and parking fees, along with turnpike, tunnel, ferry, and bridge tolls, are not included in the mileage allowance itself.
Virginia Code § 30-19.15 separately applies the § 2.2-2823 mileage framework to members of the General Assembly, legislative employees, and members of legislative committees traveling on official Commonwealth business.
These state travel rules apply to official government travel and do not establish a mileage reimbursement requirement for private employers.
What Is the Virginia Workers’ Compensation Mileage Rate?
Virginia's Workers’ Compensation Commission publishes its own mileage reimbursement rates.
For 2026, the Commission lists:
January 1 through June 30: 72.5 cents per mile
Beginning July 1: 76 cents per mile
The Commission states that its January 1 mileage rate automatically changes to match the IRS standard mileage rate in effect on that date.
It then increased the 2026 rate to 76 cents effective July 1 following the IRS mid-year adjustment.
These rates apply in the workers’ compensation context and should not be treated as a universal mileage reimbursement requirement for private employers.
What Mileage Reimbursement Options Can Virginia Employers Use?
Private employers can choose from several approaches for reimbursing employees for the real, business-required costs associated with using personal vehicles for work.
Cents-Per-Mile (CPM)
Cents-Per-Mile (CPM) reimburses employees using a set rate for each qualifying business mile.
Employers may use the IRS standard mileage rate or another rate appropriate for their program. CPM can be straightforward for occasional drivers because reimbursement directly follows documented business mileage.
If a mileage allowance exceeds the applicable federal standard rate, the excess may have different tax treatment under IRS accountable-plan rules.
Fixed and Variable Rate (FAVR)
Fixed and Variable Rate (FAVR) reimburses drivers for the real, business-required fixed and variable costs associated with owning and operating a personal vehicle for work.
Fixed costs can include depreciation, insurance, registration, and related ownership expenses. Variable costs can include fuel, maintenance, and tires.
FAVR is an IRS-recognized mileage allowance methodology with specific requirements. For 2026, the IRS sets the maximum standard automobile cost for a FAVR plan at $61,700.
Because fixed and variable expenses are calculated separately, FAVR can account for differences in business mileage and geographically variable vehicle costs.
Tax-Free Car Allowance (TFCA)
A Tax-Free Car Allowance (TFCA) is an accountable reimbursement arrangement designed to reimburse employees for the real, business-required cost of using a personal vehicle for work.
Tax-free treatment depends on satisfying applicable IRS accountable-plan requirements, including adequate substantiation and treatment of excess payments.
Companies with different driver populations can also use a mixed mileage reimbursement strategy.
For example, an employer might use FAVR for employees with substantial recurring business mileage and CPM for employees who drive less frequently.
How Should Virginia Employers Manage Mileage Reimbursement?
A clear mileage reimbursement policy gives employees and administrators a consistent process to follow.
The policy should explain which trips qualify as business mileage, how employees document those trips, which reimbursement method applies, and when payments are processed.
Accurate mileage records also support IRS accountable-plan requirements and give Finance, HR, and Operations teams better visibility into business driving.
Employers should review their policies regularly.
The IRS's mid-year rate adjustment in 2026 is a good example of why reimbursement programs benefit from regular review.
Fuel costs, insurance, maintenance, employee driving patterns, and tax requirements can all change over time.
Build a Mileage Reimbursement Program That Fits Your Virginia Drivers
Virginia gives private employers flexibility in how they structure mileage reimbursement, while federal tax rules and specialized state reimbursement rules still need to be considered.
The right approach depends on how often employees drive, where they work, and the real business-required costs associated with using their personal vehicles.
Cardata helps companies design and manage mileage reimbursement programs, including FAVR, CPM, TFCA, and mixed programs for different driver groups.
From mileage capture and reimbursement calculations to compliance support and direct-to-driver payments, Cardata helps make mileage reimbursement simpler for employees and easier for Finance, HR, and Operations teams to manage.
Talk to Cardata about building a mileage reimbursement program for your Virginia drivers.
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