The state of Ohio does not require mileage reimbursement for private employees. However, many businesses pay a mileage rate as a way to offset the costs of personal vehicles. What mileage rate should Ohio employers pay?
Ohio mileage reimbursement law
Unlike California, Illinois, and Massachusetts, Ohio does not require businesses to reimburse employees for vehicle use. However, Ohio employers do have certain considerations to follow when employees use personal vehicles for work.
State employees vs. private employees
According to Ohio Administrative Code 123:6-1-03, state employees must be reimbursed for mileage under certain conditions. This would occur if using a personal vehicle would be more cost-effective than using a state vehicle. State of Ohio employees then receive the federal business mileage rate of 70 cents per mile for 2025.
Private employers do not have to follow this law. But in order to treat employees fairly and to attract new employees, many employers offer a mileage reimbursement. What's the best rate to use?
Ohio mileage reimbursement 2025
Many Ohio employers pay the IRS federal rate of 70 cents per mile for 2025. This rate is not required by law. The only legal consideration is the Ohio minimum wage.
As of January 2025, the Ohio minimum wage is $10.70 per hour. An employer can use a mileage reimbursement or car allowance to prevent an employee's take-home wage from falling below this threshold.
Ohio vehicle costs for reimbursement
To determine the best mileage reimbursement rate for Ohio drivers, take time to consider the costs that should be reimbursed.
Mileage reimbursement for gas
Fuel costs are the most obvious expense a mileage reimbursement should cover. In the state of Ohio, gas prices tend to hover around the national average. This means that the federal mileage rate, which uses average costs, is a good indicator of reimbursement amounts.
Car insurance costs in Ohio
Unlike fuel, auto insurance rates tend to remain below average in Ohio. While the average premium nationwide is around $1,900 in 2025, the cost averages around $1,600 in Ohio. As a result, the federal mileage rate might slightly over reimburse drivers in Ohio on that basis.
Other costs covered by mileage reimbursement
Drivers in Ohio also tend to experience below-average costs for maintenance and repairs. This is another indicator that the federal mileage reimbursement might overpay Ohio employees. Ohio employers should consider other options for helping employees cover vehicle costs.
Ohio mileage reimbursement options
Driver mileage reimbursement in Ohio does not have to follow the federal rate. As a result, businesses can choose a different approach. Here are three other options:
Car allowance for Ohio drivers
A business can choose instead to pay a monthly car allowance. This is a monthly stipend designed to fit that business and its location-based costs. However, a car allowance is taxable income for the employee. For this reason, employers may want to avoid wasting money on taxes.
FAVR reimbursement
A fixed and variable rate plan (also called FAVR) is a good fit for Ohio drivers. This is because this IRS-recommended plan derives rates based on the location of employees. In a less expensive state like Ohio, this approach ensures that employees receive enough money while avoiding overpayments. This is the most accurate and flexible approach but is administratively complex.
Mileage allowance plan
A mileage allowance is a car allowance with a limit on mileage based on the federal mileage rate equivalent. While this approach is more complicated than a typical car allowance, it is less complex than a FAVR plan. It is also tax-free. However, while it will save money relative to paying the IRS mileage rate outright, it can prove limiting for employee productivity.
Mileage reimbursements in Ohio 2025
As you determine the best reimbursement option for Ohio employees, let mBurse offer guidance. Our rate comparison calculators are useful tools. And our professional services team can offer policy guidance and access to benchmarking data for Ohio-based employers.
