Ohio is a mixed bag of industries, most of which demand at least some amount of business-related driving. From manufacturing and logistics to sales, construction, hospitality services, and beyond, workers across sectors are forced to navigate busy roads on a daily basis to keep fundamental supply chains flowing. Picture this: your mobile employees embark on long-distance journeys to fulfill their professional responsibilities. Each mile they travel is a testament to their dedication as a part of a larger team. Whether or not mileage reimbursement is enforced by state laws, it must be interwoven within the fabric of employee reimbursement strategies – they deserve it! Accordingly, this article will delve into the intricacies of Ohio mileage reimbursement rules and regulations, shedding light on the fundamental principles, legal implications, and practical considerations that govern this symbiotic relationship between employer and employee in matters of vehicle expenses.
Ohio mileage reimbursement tax and labor laws
There are no distinct reimbursement tax or labor laws for businesses in the Buckeye State. That is to say, employers are not required to reimburse their mobile employees for business driving. Nevertheless, specific organizations, like government agencies or institutes for higher education, may have established their own in-house policies for workers. For instance, Rule 126-1-02 of the Ohio Administrative Code defines the rates and requirements for reimbursement of travel expenses of state agents, namely, those whose compensation is paid using state funds. The code specifies the conditions and limitations for travel at state expense, such as the approval process, maximum allowable rates, documentation requirements, exceptions, and unique circumstances. As far as mileage reimbursement goes, the rule includes meticulous details for the use of personal vehicles:
- Mileage expenses on state business can be reimbursed using the Internal Revenue Service (IRS) and the business standard mileage rate it sets annually
- The director of the office of budget and management will review the mileage reimbursement rate quarterly.
- Commuting mileage from home to headquarters or vice versa is not reimbursable, except for reporting to a different location than the headquarters.
- Reimbursement for commuting is based on the distance from home to the alternate location minus the state agent’s normal commute distance.
- Travel expense reports should indicate intermediate destinations and vicinity mileage after arrival at the destination.
- Only one state agent will be reimbursed when multiple agents travel in the same privately owned automobile.
- Travel by commercial transportation is authorized at the lowest available rate, and business class travel can be authorized for segments exceeding eight hours.
- Reimbursement for automobile rental is authorized if it is the most economical mode or when other transportation options are not easily accessible.
- Liability insurance and loss damage waiver must be purchased for rented vehicles, and the cost should be considered when determining the most economical mode of transportation.
Employers of all stripes ought to take a cue from the rigorous nature of this policy. While it is not required, compensating your professional drivers for their business mileage will help keep them feeling as valued and happy as Ohio state workers.
What is the Ohio mileage reimbursement rate in 2023?
There is no rate specific to Ohio; businesses operating in the state are encouraged to use the federal rate of 65.5 cents as a guideline. The Internal Revenue Service (IRS) determines this figure yearly by looking at a complex web of factors, including economic indicators, fuel prices, and vehicle operating costs.
From an employer’s perspective, it is imperative to discern the fine line between business-related mileage and personal commutes, lest the delicate balance of tax compliance be disrupted. Legislative amendments and revisions may herald shifts in reimbursement rates, the imposition of new documentation requirements, or the delineation of distinct categories of eligible expenses.
In any case, employers can use this rate as a guideline for reimbursement, but they are not required to do so – indeed, they are able pay more or less than the IRS rate, so long as they comply with the minimum wage and overtime laws. Employees who are not reimbursed for mileage or who receive less than the IRS rate can claim the difference as an unreimbursed employee expense on their tax return.
Ohio average mileage reimbursement rates
The average reimbursement rate in Ohio tends to be higher than the national average of $600. Ohio is in the Midwest, and the average reimbursement in the Midwest region is about $630 per month. This may be because people drive longer distances in Ohio or more frequently for work. However, your mileage may vary, and many different circumstances affect mileage reimbursement rates.
Regarding the state’s thriving economy, several industries stand out as prime examples of sectors that heavily rely on vehicular transportation. These industries, among others, underscore the significance of vehicles in Ohio’s economic landscape, serving as the lifeblood that enables efficient operations and propels growth forward.
- Manufacturing: Ohio is known as America’s “industrial heartland” and proudly boasts a robust manufacturing sector comprising numerous factories and production facilities that heavily depend on transportation for the delivery of raw materials and the shipment of finished goods. From automotive assembly plants to heavy machinery manufacturing, the state’s industrial prowess necessitates extensive business-use driving. Professionals in this domain find themselves behind the wheels of delivery trucks, ensuring seamless supply chains or attending client visits to foster productive relationships.
- Logistics: Due to the state’s geographic location and infrastructure, logistics, warehouse, and transportation industries continue to thrive. Thousands of trucks and delivery vans constantly crisscross the state’s roadways. The tireless efforts of drivers and freight handlers form the backbone of an efficient supply chain integral to Ohio’s economy. Ensuring products reach their destinations promptly requires dedicated business-use driving skills and a deep understanding of the intricate network of roads and highways crisscrossing the Buckeye State.
- Sales: For sales professionals in various industries, hitting the road is essential to the job. Be it medical representatives promoting breakthrough pharmaceuticals or real estate agents showcasing prime properties, the need for business-use driving becomes an inherent part of the journey toward closing deals. Ohio’s diverse commercial landscape provides ample opportunities for those who can deftly maneuver the art of selling and navigating the roads.
- Construction: This industry perpetually reshapes skylines and landscapes. Whether managing construction projects, inspecting sites, or supervising teams, professionals in this field shuttle between work sites and client meetings. Navigating the twists and turns of Ohio’s roads, they lay the groundwork for the state’s infrastructural evolution while embodying the symbiotic relationship between progress and mobility.
- Service sector: Ohio’s robust service industry, encompassing hospitality, catering, and event management, thrives on the power of personal connections and flawless execution. From delivering exquisite culinary delights to orchestrating memorable events, professionals depend on business-use driving to ensure punctuality and customer satisfaction. With the state’s varied topography offering an array of venues and destinations, they become the conductors of seamless service experiences.
- Agriculture: farmers and businesses rely on vehicles to transport crops, livestock, and equipment.
Next steps for employers and employees
Compensating for business-use driving in Ohio, even in the absence of legal requirements, holds several advantages for employers and their workers. Reimbursements are tangible expressions of appreciation for employees’ efforts and recognizes the value of their time and resources dedicated to work-related travel. By subscribing to comprehensive reimbursement programs, employers can foster a positive work environment that nurtures employee satisfaction and loyalty.
One of the most effective compensation methods is the use of FAVR programs, combining fixed and variable reimbursement elements. These programs calculate reimbursement rates based on fuel costs, vehicle depreciation, maintenance expenses, and insurance premiums. By incorporating these variables, employers can ensure that employees are adequately compensated for their business-related driving expenses, promoting fairness and transparency. Implementing FAVR programs demonstrates a commitment to equitable treatment, enhances employee morale, and incentivizes efficient and responsible vehicle usage. The first steps of subscribing to this kind of program typically involve:
- Contacting a reimbursement partner: vehicle reimbursement program providers will have everything you need to get set up.
- Choosing a standard vehicle: Drivers are granted the freedom to choose the vehicle type that aligns with their individual needs so long as it meets the company’s requirements of the program standard vehicle.
- Establishing a business use percentage: The business use percentage (BUP) is the average time a vehicle will be used for business-related journeys on a weekly basis. A recommended starting point, based on IRS guidelines, is 71.4 percent, or 5/7ths of the week.
- Choosing your location: The employee’s home address determines state and local taxes, license and title fees, insurance premiums, and daily fuel prices.
- Setting a mileage band: A mileage band is the range of miles an employer predicts an employee will drive, which helps calculate the impact mileage may have on a vehicle’s future resale value.
Understanding and adhering to Ohio’s mileage reimbursement tax laws – or lack thereof – is crucial for employers and employees. The federal mileage reimbursement rate in 2023 is the only benchmark against which organizations and individuals can gauge their reimbursements within the state—unless they implement a data-driven reimbursement program like FAVR. In this dynamic environment, the Ohio average mileage reimbursement rates offer valuable insights, shedding light on the competitive landscapes across industries and sectors. By embracing these considerations, businesses and professionals can navigate the intricate web of Ohio’s mileage reimbursements, fostering equitable partnerships and propelling forward with clarity and compliance.
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 nor 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.