The Internal Revenue Service has established a mileage reimbursement rate of $0.725 per mile for business use in Montana for 2026. This figure serves as the standard compensation rate for state employees who use personal vehicles for work-related travel.

Private sector businesses maintain flexibility regarding reimbursement practices. While many companies opt to mirror the federal standard, Montana law permits employers to implement individualized policies that may differ from the IRS benchmark.

The accompanying table provides an overview of Montana's current reimbursement rates, showing how they correspond with standard IRS rates and presenting an analysis of year-to-year rate changes.

Note: Organizations have flexibility to reimburse employees at rates that differ from the IRS standard. However, any reimbursement exceeding the IRS rate will be classified as taxable income to the employee.

To calculate applicable mileage reimbursement for Montana, do the following:

1. Select the appropriate tax year for your calculation period
2. Enter the total miles driven to compute eligible reimbursement amounts

The calculator below provides precise reimbursement figures based on current rates and specified mileage inputs.

Montana's mileage reimbursement laws work differently for various types of workers across the state.

The state has separate rules for different employee groups. State workers follow one set of guidelines, while employees with workplace injuries fall under different regulations.

These reimbursement rules connect closely with Montana's Minimum Wage Law, which affects how businesses must handle travel expenses. This relationship shapes how companies create their policies for paying back employees who use personal vehicles.

When employers know these specific mileage laws, they can create better reimbursement plans while making sure workers get properly paid for using their own cars for business purposes in different situations.

MCA 2-18-503 for state employees' mileage reimbursement

Montana's mileage reimbursement laws for state employees operate under statute MCA 2-18-503, which ties compensation directly to IRS guidelines. While the current standard rate sits at $0.725 per mile, the law incorporates several nuanced provisions that modify this baseline figure.

When state employees choose personal vehicles despite government transportation options being available, their reimbursement drops significantly to 48.15% of the standard IRS rate. This reduction serves as a gentle nudge toward using state-owned vehicles while still acknowledging an employee's preference for their own transportation.

The law also addresses high-volume travelers. State employees who exceed 1,000 miles in a single calendar month see their per-mile rate decrease by three cents for all travel beyond this threshold. This graduated approach recognizes the diminishing incremental costs associated with extended vehicle usage.

Code 24.29.1409 of the workers' compensation act for injured employees

Montana workers’ compensation rules (ARM 24.29.1409) require workers’ compensation insurers to reimburse injured workers for certain reasonable travel expenses related to authorized medical care, including mileage. Mileage reimbursement is paid at the current rate specified for state employees, which changes over time.

The statute does include notable exceptions that limit employer liability in certain circumstances. When an injured employee seeks treatment from medical providers not authorized by the employer or their insurance carrier, the mileage reimbursement obligation does not apply. Similarly, employers need not compensate for travel expenses when appropriate medical care exists within a 15-mile radius of the injured worker's home.

Montana minimum wage act and mileage reimbursement

Montana's Minimum Wage Law, while fundamentally focused on wage compensation standards, maintains significant implications for mileage reimbursement policies across the state.

The law creates an important intersection between travel expenses and minimum hourly earnings. Employers in Montana must provide mileage reimbursement in situations where failing to compensate for vehicle usage would effectively reduce an employee's hourly earnings below the state-mandated minimum of $10.85 per hour. This provision ensures workers do not subsidize business travel costs at the expense of their basic guaranteed income.

Montana's wage regulations also clarify what constitutes compensable work time. The law requires payment for all "hours worked," a designation that encompasses preparation activities, time spent traveling for business purposes, attendance at required meetings, and participation in job-related training sessions. This inclusive definition of compensable time directly influences when mileage reimbursement becomes necessary to maintain minimum wage compliance.

The law further stipulates that gratuities received by employees cannot be factored into minimum wage calculations. This prohibition on counting tips toward the hourly minimum amplifies the importance of proper expense reimbursement, as employers cannot offset travel costs against discretionary income provided by customers.

Note: Montana law permits businesses with gross annual sales of $110,000 or less that fall outside Fair Labor Standards Act jurisdiction to pay employees at a reduced rate of $4.00 per hour. This alternative wage standard does not apply when employees engage in interstate commerce activities, in which case employers must provide compensation at the higher of the federal or Montana minimum wage rates.

Implementing thoughtful employee mileage reimbursement practices helps Montana businesses reduce administrative headaches while keeping employees satisfied. Clear policies also support compliance with applicable rules, particularly around record-keeping for tax purposes, minimum wage safeguards for nonexempt employees, and workers’ compensation travel reimbursement when an employee needs medical treatment for a work-related injury.

Establish a clear mileage reimbursement policy

Create a formal written expense policy that clearly outlines what qualifies as reimbursable business mileage versus regular commuting. Your document should specify whether you follow the IRS standard mileage rate ($0.725 per mile for 2026) or use a custom rate. If you reference Montana’s public-sector benchmark, note that Montana guidance commonly aligns to the IRS rate and that miles over 1,000 in a calendar month are reimbursed at 3 cents less per mile under Montana law for state-related travel.

Include submission deadlines for expense claims, required documentation, and your company’s approval process. Make the policy easy to find in your handbook and internal reference materials.

Use mileage tracking software or apps

Provide employees with reliable tracking tools to simplify mileage reporting. Look for apps with automatic GPS tracking that can distinguish between business and personal trips with minimal effort. These digital solutions create consistent documentation that helps satisfy both IRS requirements and Montana's Workers' Compensation obligations if employees need medical treatment for workplace injuries. Digital tracking also produces reports that make reimbursement processing faster and more accurate.

Ensure accurate and timely record-keeping

Require employees to maintain logs showing the date, starting location, destination, business purpose, and total miles for each trip. Set a consistent submission cadence; monthly works well for many businesses. Keep supporting documentation for related expenses (e.g., parking) and retain records to support tax treatment and internal controls.

Communicate clearly and frequently with employees

Make sure all employees understand your mileage reimbursement procedures, especially as Montana transitions to its new minimum wage law in 2026. Include mileage policy training during employee onboarding and offer refresher sessions when policies change. Create simple reference guides explaining eligibility, submission procedures, and expense reimbursement timelines. When employees understand the process, they're more likely to submit accurate, timely expense reports and less likely to have concerns about fair compensation.

Regularly review and update your mileage policy

Schedule annual reviews of your mileage reimbursement policy to ensure it remains current with IRS rates, which typically change each January. Regular updates demonstrate your commitment to fair compensation practices while preventing potential compliance issues. These reviews also provide an opportunity to assess whether your current approach meets both your business needs and employee expectations in Montana's evolving employment landscape.

Montana mileage reimbursement practices typically follow federal guidance while factoring in Montana specific rules for public travel and workers compensation. For 2026 the IRS standard business mileage rate is $0.725 per mile, and Montana public sector mileage reimbursement commonly mirrors that rate with a reduction of $0.03 per mile after 1,000 miles in a calendar month under Montana law. Workers compensation rules in Montana direct workers compensation insurers to reimburse injured workers for reasonable travel expenses related to authorized medical care using rates allowed for state employees, rather than creating a general mileage mandate for every trip. For wages, Montana minimum wage is $10.85 effective January 1, 2026 and employers generally must pay the greater of the federal or Montana rate, with a limited $4.00 per hour exception for certain businesses not covered by the FLSA with gross annual sales of $110,000 or less.

Proper reimbursement policies benefit both parties in the employment relationship. Employees avoid bearing business costs inappropriately, leading to increased job satisfaction and retention. Employers who implement fair and transparent practices demonstrate their commitment to equitable treatment while ensuring compliance with applicable regulations.

Brex's expense management software offers a streamlined solution for businesses managing these requirements. Brex automates the entire reimbursement process from submission to payment, including approvals, receipt capture, and policy enforcement. By integrating corporate cards, expense tracking, bill payment, travel management booking, and startup banking into one place, companies can simplify operations while maintaining consistent policy application. Sign up for Brex today to transform your organization's approach to expense management while maintaining compliance with Montana's reimbursement regulations.