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.
In the state of Washington, a mileage reimbursement law does not exist at the state level. The only Washington mileage reimbursement law is in the city of Seattle. 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 IRS annually sets a standard mileage rate, which serves as a guideline for businesses across the country. For 2025, 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.
In the absence of a law mandating a mileage rate, WA employers often use IRS standard mileage rate as a benchmark. For 2025 the business mileage rate is 70 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.
As a result of Seattle mileage reimbursement rules, many employers pay the rate of 70 cents per mile. 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.
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.
The fixed costs, or ownership-based costs, remain steady from month to month. These costs include
The variable costs, or operational costs, rise and fall based on mileage and market prices. These costs include
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.
It is vital for employers to establish clear reimbursement policies to maintain transparency and avoid potential disputes.
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.
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.