This guide provides an overview of the mileage reimbursement laws and rates applicable in Washington State. If you employ workers in the state of Washington, this guide will help you ensure compliance and fair compensation for work-related travel.
Washington State Mileage Reimbursement Law
In the state of Washington, a mileage reimbursement law does not exist at the state level. However, Washington employers are generally expected to cover reasonable travel expenses incurred by employees. This practice aligns with federal guidelines set by the Internal Revenue Service (IRS). The city of Seattle does, however, set specific guidelines for reimbursements.
Federal Influence on State Policies
The IRS annually sets a standard mileage rate, which serves as a guideline for businesses across the country. For 2024, employers in Washington State may choose to adopt the IRS mileage rate to ensure fair compensation. Although not legally required, using the IRS rate is a common practice that helps maintain consistency and fairness.
The IRS identifies in Publication 463 two different types of federal mileage rates. The first is the standard business mileage rate. The second is a fixed and variable rate. Both rates can be paid tax-free as part of an accountable plan.
Washington State Mileage Reimbursement 2024
In the absence of a law mandating a mileage rate, WA employers often use IRS standard mileage rate as a benchmark. For 2024 the business mileage rate is 67 cents per mile. This rate is subject to annual adjustments based on factors such as fuel prices and vehicle maintenance costs.
Keep in mind that this rate was calculated using national average costs. If an employee faces higher-than-average costs, then this national mileage rate might not work well. Washington has much higher gas prices than average, so it is possible that the rate will not work for all Washington drivers.
Some employers may choose to use a fixed and variable rate reimbursement instead of a standard rate. This plan, also known as FAVR, generates rates using localized cost data.
Seattle Reimbursement Rules
The only Washington mileage reimbursement law is in the city of Seattle. Employees in Seattle are covered under the city code, which requires reimbursement of work-related expenses. Chapter 14.20 includes the following language:
"an employer shall indemnify the employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of the employee's duties"
This language resembles the wording of labor codes in California and Massachusetts that require full reimbursement of work-related vehicle costs. For this reason, employers with Seattle-based workers should use the IRS mileage rate or a FAVR plan to cover vehicle travel costs.
What a Mileage Reimbursement Covers
A mileage reimbursement compensates employees for using their personal vehicles for business purposes. This compensation covers to sets of costs as determined by the IRS: fixed and variable costs.
Reimbursing fixed costs
The fixed costs, or ownership-based costs, remain steady from month to month. These costs include
- Auto insurance premiums
- Depreciation in value
- Taxes, registration, and fees
Reimbursing variable costs
The variable costs, or operational costs, rise and fall based on mileage and market prices. These costs include
- Fuel (determined by gas prices)
- Oil changes
- New tires
- Routine maintenance
Properly reimbursing vehicle travel costs
A mileage reimbursement using a standard rate like the IRS business rate should cover all of the above costs. However, a standard mileage rate tends to reimburse mileage-based costs better than fixed costs. For this reason, many employers prefer to use a fixed and variable rate, also known as FAVR.
Implementing a WA State Mileage Reimbursement Policy
It is vital for employers to establish clear reimbursement policies to maintain transparency and avoid potential disputes.
Steps for Washington Employers
- Establish Clear Guidelines: Clearly define which travel expenses qualify for reimbursement. This includes specifying the types of trips that are eligible, such as client meetings or work-related errands.
- Set a Competitive Rate: While not mandatory, aligning your reimbursement rate with the IRS standard or FAVR can promote fairness and employee satisfaction.
- Document Travel Expenses: Require employees to maintain detailed records of their work-related travel, dates, mileage, and purposes of trips. To streamline the reimbursement process and ensure accuracy, use a mileage tracking app.
- Regularly Review Policies: Periodically assess and update your mileage reimbursement policy to reflect changes in IRS rates and company practices.
Benefits for Employees
For employees, understanding the reimbursement policy is crucial. They should keep accurate records of their travel to ensure they receive appropriate compensation. It's also beneficial to communicate with employers regarding any discrepancies or uncertainties.
Reimbursing Personal Vehicles in Washington State in 2024
While Washington State does not have a specific mileage reimbursement law, employers can follow federal guidelines to establish fair compensation practices. By implementing a clear policy and staying informed about IRS rate adjustments, both employers and employees can navigate work-related travel expenses effectively. This proactive approach fosters transparency and trust, ultimately contributing to a more harmonious workplace environment.
To learn more about constructing a competitive program using federal mileage rates, compare the IRS mileage rate vs. FAVR using our calculator.
