California Mileage Reimbursement 2025: Rate Details, Methods, and Employer Duties

California employers must reimburse staff for business-related vehicle use based on mileage rates or alternative approved methods. The 2025 policy outlines IRS rates, covered expenses, and mandatory employer responsibilities under California labor law.

By Douglas Wade, Attorney

Email | Call (800) 484-4610

Have a quick question? We answered nearly 2000 FAQs.

Table of Contents

Introduction

1. One-time payments (Lump-sum)

2. Actual Mileage

3. Actual Expenses

4. A Combination of Variable and Fixed Rates

Frequently Asked Questions: California mileage reimbursement in 2025

Summing up

Introduction

Employers in California must pay you back in full whenever you use your own automobiles for work-related activities. Your reimbursement can be calculated in four different ways:

One-time payments (Lump-sum),
Real mileage,
Real expenses, or
A combination of variable and fixed rates.

The following table illustrates how many employers use the IRS’s actual mileage-based reimbursement rates.

The Reason for Using Your Own Car	Rate of IRS Reimbursement
Use for business	$0.70 for each mile
Active-duty personnel relocating or receiving medical care	$0.21 for each mile
For the benefit of a charity	$0.14 for each mile

We go into more depth about each of these four reimbursement options below.

1. One-time payments (Lump-sum)

Employers in California may compensate you for work-related automobile expenses in the form of a lump sum payment. Also known as:

A “car allowance,”
A “gas stipend,” or
A “per diem.”

This is a recurring payment of a certain amount that is considered sufficient to cover your expenditures; it is frequently made on a monthly basis.

If you regularly drive your own vehicles on identical routes each day or week, you are likely to adopt the lump-sum option. Because these one-time payments minimize the amount of documentation required, they may be the best option when the miles being driven stay constant.

However, a lump sum payment may not be sufficient due to fluctuating prices for gasoline. In these situations, you have the right to contest the sum and request complete repayment.

2. Actual Mileage

You can decide on a per-mile compensation amount with your company. You could:

Accept the mileage compensation rate recommended by the California Dept. of Human Resources or the IRS, which is $0.70 a mile for 2025
Set your own customized rate

The agreed-upon rate must, however, properly cover your travel expenses for work, and you must have the option to contest the rate if you feel it falls short. Additionally, unless your company pays you in excess of the current IRS compensation rate, your California mileage reimbursement in 2025 shouldn’t be taxed as income.

It is your duty to keep track of your mileage if you drive your own car for work. It can sometimes be challenging to keep up with this.

3. Actual Expenses

You must note the precise amount of all losses incurred while driving for work using this calculation approach, including:

The price of filling up the tank after each workday,
Variations in the car’s resale value from year to year to calculate depreciation, and
Expenses for maintenance associated with driving for employment.

Although the most precise reimbursements are those based on real expenses, this technique has onerous requirements for keeping records. Additionally, disagreements with your employer may occur regarding things like which vehicle maintenance shop you utilize.

4. A Combination of Variable and Fixed Rates

The fixed expenses of using a private automobile for business, such as insurance premiums, are separated from the variable costs, such as gas, by a variable and fixed rate reimbursement.

The fixed expenses are subsequently compensated on an individual premise to a mutually agreed-up sum. Based on a predetermined mileage rate, the variable expenditures are repaid.

Frequently Asked Questions: California mileage reimbursement in 2025

1. What is covered under the policy for California mileage reimbursement in 2025?

Gas expenses,
Wear and tear-related depreciation on the vehicle,
Maintenance and repair expenses, car registration costs, and
Auto insurance.

Your everyday travel to and from work is not included in California mileage reimbursements in 2025. Rather, it includes any work-related errands, like:

Traveling to meetings with clients, customers, and other colleagues,
Taking a car to conferences,
Taking the car to the store to get goods, and/or
Driving to a bank to make deposits or for other business-related purposes.

Additionally, only reasonable and essential expenses must be covered by the reimbursement. Extraneous car expenses are not required to be paid for.

2. Does California mileage reimbursement in 2025 appear on a second paycheck?

It is not necessary for mileage reimbursements to be paid out of pocket in addition to your salary or other benefits. Your paycheck must, however, demonstrate that the mileage reimbursement is included.

3. Is it possible for me to forego California mileage reimbursement in 2025?

No. Any contract that denies you full compensation for your work-related car expenses is null and void.

4. What is the mileage reimbursement policy of my employer?

Which reimbursement plan is applied is up to you and your company to decide. You must agree on the rate per mile if a mileage compensation system is being used. This is usually outlined in your employee handbook or employment agreement.

5. What is the most effective mileage reimbursement technique?

Each of them has benefits and drawbacks.

Compared to a lump sum contract or gas stipend, the mileage reimbursement system is more accurate. It still doesn’t take fluctuating gas prices into consideration, though.

Because the mileage rate is subject to fluctuation depending on local gas prices, many people choose the FAVR approach. This improves an FAVR reimbursement mechanism’s accuracy.

6. What happens if my employer doesn’t cover enough of my personal car expenses?

You can contest the sum that is being reimbursed if your company is undercompensating you for using your cars for personal purposes. You can demonstrate that the compensation has been insufficient by providing proof of your actual expenses.

You may bring a wage & hour lawsuit against your employer if they fail to fix the disparity. You may attempt to bring a class-action lawsuit if you and your coworkers are both receiving inadequate compensation.

Summing up

The policy for California mileage reimbursement in 2025 mandated that you compensate your employees with the mileage they use to cover the distance in their personal vehicles to do office work. It is a requirement of the California labor law, section 2802 and it is not voluntary.

As an employer, it is your obligation to make sure that this payment is right and just so that you may not end up in court or to protect your own company image. Ensuring that your employees have full reimbursement for the business travel is also necessary, in this regard, it is important to make sure that they get to know the latest California mileage reimbursement rates.

Have a quick question? We answered nearly 2000 FAQs.

See all blogs: Business | Corporate | Employment

Most recent blogs:

Severance Pay California: What It Includes and How to Change the Terms

California severance pay is not legally required, but agreements often include pay, benefits, and legal waivers. Employees can negotiate terms, challenge clauses, and improve severance offers with legal or personal review.

Employment Litigation: Key Issues in Job Termination, Discrimination, and Harassment Cases

Employees may sue for job termination, discrimination, or harassment when workplace actions violate federal or state employment rules. This article explains legal protections, common violations, and employee rights involved in workplace-related lawsuits.

Company Morale: 20 Practical Ways to Improve Workplace Culture and Engagement

Improve company morale with 20 practical tactics that strengthen workplace culture, boost motivation, and support everyday team interaction. Encourage positivity, increase retention, and support employee satisfaction through real-world practices designed for today's professional environment.

California Mileage Reimbursement 2025: Rate Details, Methods, and Employer Duties

Temporary Disability California: Workers’ Compensation Coverage, Benefit Limits, and Qualifying Conditions

Temporary disability in California pays part of your wages after a workplace injury confirmed by an approved medical provider. Eligibility, time limits, and payment amounts depend on work status, legal codes, employer options, and medical updates.

Legal Age to Work in 2025: Employment Limits for Minors

State and federal laws set age, hour, and job restrictions for minors working in 2025 to protect their safety. Review employment limits for children across all fifty states, including agricultural rules, certificates, and non-hazardous job requirements.

Abusive Conduct Under California Law: Definition, Workplace Examples, and Employer Obligations

Abusive conduct in California workplaces includes bullying, hostile language, and exclusion that disrupts an employee's job performance. Employers must provide harassment prevention training and meet legal obligations under FEHA and Senate Bill No. 778.

Minimum Wage in San Diego 2025: Updated City and County Pay Rates for Employers

Minimum wage in San Diego City is $17.25 per hour in 2025, while the county rate remains $16.50. Employers must comply with state, city, and county wage laws or face penalties for underpayment and related violations.

California Labor Law: 2025 Employer & Employee Guide to Wages, Breaks, Leave, and Rights

California’s 2025 labor laws address wages, breaks, overtime, workplace safety, discrimination, sick leave, and employee protections. This guide outlines rules on scheduling, payroll, final paychecks, paid sick time, and employment standards for minors.

California Final Paycheck Law: Payment Timelines, Legal Rules, and Employer Responsibilities

California employers must follow exact final paycheck rules when employees quit or are fired, or risk paying penalty wages. The article covers payment timing, employer duties, and industry-specific exceptions including film, oil drilling, and agriculture.

Can You Work at 14 in California? Laws, Restrictions, and Permits for 14- and 15-Year-Olds

Minors aged 14 can work in California, but strict federal and state labor laws limit hours, industries, and duties. Work permits are mandatory for 14- and 15-year-olds, and employment is subject to revocation if conditions are violated.

How Many Hours Is a 9-5 Job? Daily, Weekly, Monthly, and Yearly Breakdown

A 9–5 job typically means eight hours daily, totaling 40 hours weekly across five standard workdays. Monthly and yearly hours vary depending on vacations, with most averaging 160 monthly and 2,000 annually.

Exempt Employee California: 2025 Rules, Salary Thresholds & Classification Tests Explained

California's 2025 exempt employee rules include new salary thresholds for fast food and healthcare workers under state wage laws. Detailed tests determine exemption status based on duties, salary structure, and consistent application of independent judgment.

Fair Chance Employers: A 2025 Guide to Compliant and Inclusive Hiring Practices

Fair chance hiring promotes compliance with evolving state and federal laws that support inclusive recruitment for applicants with records. Employers must assess convictions individually, follow proper procedures, and align background checks with job relevance and legal standards.

PAGA Claims in California: How Workers Can File and What Penalties Employers Face

Employees in California can file PAGA claims for labor violations and recover civil penalties on behalf of the state. Penalties vary by infraction, and employers may reduce liability if violations are corrected within the allowed timeframe.

How Many Hours Can a 16 Year Old Work? A Complete Guide to U.S. Child Labor Laws

Federal law sets no limit on work hours for 16-year-olds, but many states impose restrictions and nighttime limits. This guide breaks down FLSA rules, state variations, job types, and penalties for violating child labor laws.

New Hire Forms Checklist: Required Documents & Onboarding Essentials for Employers

Manage new hire onboarding smoothly using this checklist of required federal, state, and internal employment documents. Meet compliance needs and simplify hiring by collecting tax forms, offer letters, benefits paperwork, and signed policy acknowledgments.

Comp Day Explained: Eligibility, Benefits, and How to Calculate It Correctly

Comp day lets eligible employees take time off instead of receiving overtime pay, offering flexibility in work schedules. This article explains how comp time is calculated, who qualifies, and the differences between comp time and overtime rules.

Work Permit California: Requirements, Age Limits, and Job Restrictions for Minors

Minors in California need a work permit to get jobs, with specific restrictions based on age, role, and school status. This article outlines age requirements, job limitations, working hours, and exceptions to the state’s work permit rules for minors.

Split Shift Meaning Explained: How It Works, Benefits, Laws, and Real-World Examples

Split shifts divide a workday into separate periods with a long unpaid break, boosting flexibility and reducing staffing costs. This schedule helps businesses meet demand during peak hours while supporting employee well-being and complying with labor laws.

Is California an At-Will State? 4 Key Exceptions You Need to Know

California permits at-will employment, but specific exceptions restrict when employers may legally terminate an employee without explanation. Contracts, public policy, fraud, and fairness-based exceptions can provide legal grounds for challenging terminations.

California Pay Data Reporting: 2025 Deadline, New MENA Category, and Updated Filing Requirements

The 2025 deadline for California pay data reporting brings updated requirements, including MENA classification and new employer obligations. Covered employers must submit demographic wage data by job role, gender, race, and pay band or face financial penalties.

Family Leave California: Paid Family Leave Benefits, Eligibility, and Updates for 2025

California’s Paid Family Leave program provides up to eight weeks of partial wage coverage for caregiving and bonding with children. Eligibility criteria and compensation limits have changed for 2025, administered through the State Disability Insurance (SDI) system.

California Child Labor Laws: Key Rules About Work Permits, Hours, and Restrictions for Minors

California sets strict rules on work permits, hours, and job types allowed for minors under its child labor laws. State and federal rules also limit dangerous tasks and require school attendance for working minors.

California Minimum Wage Increase 2025: New Rates for State, Fast Food, Healthcare, and Localities

California’s 2025 minimum wage increase sets new statewide, fast food, healthcare, and local rates employers must comply with. Exempt and industry-specific employees face new salary thresholds, impacting wage standards across sectors and jurisdictions.

Background Check California: Laws, What Shows Up, and How to Clear Your Record

California background checks show criminal history, credit data, education records, and other public details under strict screening laws. Options such as expungement, pardons, and record sealing may remove damaging entries from your personal background file.

How Many Hours Can a Minor Work in California? A Complete Guide to Labor Laws and Restrictions

Minors working in California must follow strict hour limits based on age, school attendance, and job category. Employers who violate labor rules risk significant fines and possible criminal consequences.

California Overtime Law: Rules, Exemptions, Pay Rates, and Worker Rights Explained

California overtime law requires non-exempt workers to receive extra pay for working beyond daily and weekly hour limits. Certain employees, including independent contractors and exempt workers, do not qualify for overtime based on legal standards.

How to Calculate Overtime in California: Daily, Weekly, and Double Time Pay Explained

California overtime laws require daily and weekly overtime pay for nonexempt workers, including salaried, commissioned, and piece-rate employees. This guide outlines calculating overtime, daily double time, regular pay rates, and employer responsibilities without addressing alternative workweek schedules.

What is Comp Time for PTO? A Complete Guide for Employers and Employees

Employers and employees can use comp time for PTO if it is applied legally with clear policies in place. Comp time rules differ between public and private sectors, affecting when it can substitute for overtime pay.

See all blogs: Business | Corporate | Employment

California Mileage Reimbursement 2025: Rate Details, Methods, and Employer Duties

Introduction

1. One-time payments (Lump-sum)

2. Actual Mileage

3. Actual Expenses

4. A Combination of Variable and Fixed Rates

Frequently Asked Questions: California mileage reimbursement in 2025

Summing up

Free Consultation