Florida mileage reimbursements are not complicated. Many employers use the federal mileage rate. But is this the best rate for every business?
Mileage reimbursement in Florida
The state of Florida does not require reimbursement of employees who drive personal vehicles for work. Unlike California, Illinois, and Massachusetts, no mileage reimbursement law exists in Florida. However, many businesses offset vehicle costs as a matter of fairness to employees or to stay competitive.
As a bare minimum, businesses should ensure that no worker's wage dips below the state minimum wage of $13 per hour. If an employee's vehicle costs effectively reduce wages below this amount, that is a form of wage theft. A car allowance, mileage reimbursement, or FAVR plan can help.
What is the 2024 Florida mileage rate?
In the absence of a state-mandated rate, many Florida businesses use the federal mileage rate. For 2024, the IRS mileage rate is 67 cents per mile. Some businesses may pay less than this rate if they determine that local costs remain below the national averages on which the IRS bases its calculations.
What is the best mileage rate for FL?
Because employers are free to reimburse using whatever method they like, it is worth taking the time to explore various options. When comparing plans, make sure to account for tax liability as well as cost control.
Taxable vs. non-taxable payments
Besides directly reimbursing actual expenses, three main approaches exists to paying employee vehicle costs. One is taxable, and the other two are typically tax-free.
- Car allowance - taxable unless supported with IRS-compliant mileage substantiation
- Mileage reimbursement - non-taxable if paid at the IRS rate or less and a proper mileage log is kept
- FAVR allowance - non-taxable using IRS guidelines and a compliant mileage log
FAVR vs. IRS mileage rate in Florida
FAVR plans work well for companies with employees with varying expense needs. This could be organizations with employees located in different states or in areas with differing costs. For example, urban areas tend to be more expensive than rural places.
The IRS mileage rate tends to over-reimburse and under-reimburse when workers experience different costs. This is because it is a one-size-fits-all rate based on national averages. FAVR, on the other hand, is designed to match localized costs. This approach works well for an organization seeking to pay competitive rates while staying on budget.
Florida mileage reimbursement practices
Establishing a reimbursement policy
Employers should first establish a clear reimbursement policy that outlines the process, rates, and any necessary documentation. Receiving a timely mileage reimbursement motivates employees. This means the company can attach stipulations that protect the organization's goals:
- Require employees to prove auto insurance coverage by submitting their insurance declarations page.
- Run routine motor vehicle record checks (MVR checks) to discover traffic violations.
Requiring these steps as part of the reimbursement policy protects the company from vicarious liability and negligent entrustment suits.
Florida mileage log requirements
Whether you pay the federal mileage rate or a FAVR rate designed for Florida locations, employees must keep detailed records. Here's what the IRS requires for a mileage log that keeps payments tax-free:
- Date and purpose of the trip
- Starting and ending locations
- Total miles driven
Today's mobile apps have replaced paper logs and spreadsheets. These mileage tracking apps keep accurate records, automate calculations, and streamline approval. They also yield timely reports with insights into drivers' productivity.
Costs covered by Florida mileage reimbursements
A mileage reimbursement should cover a number of different costs. Some of these are fixed costs and some are variable costs.
Fixed vehicle costs
Fixed costs remain independent of how much a person drives:
- insurance
- depreciation
- license
- registration
Variable costs
Variable costs rise and fall with miles driven:
- fuel
- maintenance
- oil
- tires
Tolls, parking, and other costs
Other reimbursable expenses for vehicle travel can include tolls and parking fees. A mileage rate does not cover these costs. The employee must demonstrate that these expenses had a business purpose. Florida businesses may choose to provide employees who drive for work with a SunPass that the company pays directly.
What's a fair 2024 FL mileage rate?
Since no Florida law governs car reimbursements, employers are free to choose a suitable plan. Determining a fair rate means finding the mileage reimbursement plan that balances driver needs and cost-effectiveness.
A FAVR plan will work best for a wide variety of employee situations in all Florida counties and cities. FAVR pays both fixed and variable costs using localized cost data to govern rates. This approach accurately reimburses a range of employees, whether five or five thousand. The employer can control costs and provide transparent payments.
To learn more about how a FAVR plan could benefit your Florida employees, contact mBurse today.
