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As a Michigan employer, you aren't legally obligated to provide mileage reimbursement. However, compensating employees for personal vehicle use in the company business is a wise decision.
When you offer mileage reimbursement, it frees up the mind space of your employees. They will know that the mileage cost will not be taken out of their pockets.
Adopting fair Michigan mileage reimbursement rates benefits your business by:
- Significantly boosting your team’s morale and loyalty
- Retaining top talent with fair travel compensation
Moreover, mileage reimbursement helps prevent unintentional violations of the FLSA guidelines, ensuring employee wages stay above the federal minimum.
Michigan business mileage reimbursement rates
The IRS standard business mileage rate in 2024 is $0.67 per mile. As a Michigan employer, you are not mandated to follow this rate, but if you choose to reimburse mileage, any amount over the IRS standard is taxable.
Here's a rundown of Michigan business mileage reimbursement rates — in compliance with the IRS — which you can adopt, too, alongside the year-on-year rate comparison.
Note: You may reimburse your employees at rates above or below the IRS standard. However, any excess reimbursement over the IRS rate is subject to taxation as income.
Michigan mileage reimbursement calculator
Using the Michigan mileage reimbursement calculator is straightforward.
- Choose the tax year for which you want to calculate.
- Input the miles driven to determine how much money can be received in return.
Michigan mileage reimbursement laws
While you're not legally required to reimburse your employees for mileage in Michigan, ensuring their take-home pay doesn't fall below the minimum wage of $10.33 per hour due to unreimbursed expenses is crucial. The Fair Labor Standards Act (FLSA), which can impact your business if overlooked guides this adherence.
Moreover, unlike the IRS, which suggests a mileage rate of $0.67 per mile for 2024, Michigan has no state law that prescribes a specific mileage reimbursement rate. This means you have the flexibility to set your own rates, higher or lower than the IRS standard.
Implications of IRS and FLSA guidelines on your business
Following IRS guidelines is optional but can simplify tax reporting. More critically, under the FLSA, you must ensure that employees' earnings, after any work-related deductions, remain above the federal minimum wage. This link between mileage reimbursement and minimum wage compliance is vital for avoiding legal pitfalls.
Legal risks of non-compliance
Failing to meet the FLSA requirements can lead to severe consequences, including penalties, lawsuits, and compensation claims. It's essential to evaluate how unreimbursed employee expenses could affect compliance with minimum wage laws and consider the broader implications for your business's legal standing.
By closely monitoring these regulations and their interplay, you can safeguard your business against potential legal issues and create a fair, compliant working environment.
Upgrade to smart mileage tracking with Ramp
Although no specific state law in Michigan mandates you reimburse your employees for travel, you still have the FLSA's clause to answer to. As per the FLSA, no employee's wage should drop below $10.33 per hour in Michigan. And FLSA's minimum wage noose is just one reason why you should follow a proper Michigan mileage reimbursement policy.
To simplify and enhance your reimbursement process, consider using Ramp. Our AI-driven expense management software can:
- Automate mileage tracking to eliminate manual errors and ensure accuracy.
- Streamline administrative tasks, allowing you to focus on core business activities.
- Maintain transparency in mileage reports.
- Align with IRS guidelines effortlessly, avoiding potential legal complications.
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