Illinois Mileage Reimbursement: Your Employer Must Pay, Or Face Penalties

Illinois requires employers to reimburse all necessary work-related expenses, including mileage. The state treats unreimbursed expenses as unpaid wages. That means interest, fines, and the right to sue.

Source: Illinois Wage Payment and Collection Act, 820 ILCS 115/9.5

The Law: 820 ILCS 115/9.5

"An employer shall reimburse an employee for all necessary expenditures or losses incurred by the employee within the employee's scope of employment and directly related to services performed for the employer."

That is the statute, verbatim. "Necessary expenditures" means reasonable costs required in the discharge of your duties that primarily benefit the employer. Driving your personal car for work qualifies.

What Makes Illinois Unique: Teeth

Illinois is the most employee-friendly state on mileage reimbursement. Here is why:

• Unreimbursed mileage = unpaid wages. Not a civil penalty. Unpaid wages. This triggers the full enforcement power of the Illinois Department of Labor.
• Monthly interest charges accrue on unpaid amounts.
• Fines payable to the Department of Labor for non-compliant employers.
• Right to sue. Employees can bring private action to recover unreimbursed expenses, plus attorney's fees.

California and Massachusetts also mandate reimbursement, but neither classifies the violation as unpaid wages with automatic interest.

Reimbursement Rate

Illinois does not set its own mileage rate. Most employers use the 2026 IRS standard rate of 72.5¢ per mile. Any amount at or below the IRS rate is tax-free to the employee. Reimbursement above the IRS rate is taxable income.

Employee Responsibilities

You must submit expenses with supporting documentation within 30 calendar days of incurring them. Your employer can extend this deadline through a written policy, but cannot shorten it.

If your employer has a written expense policy and you don't follow it, you lose the right to reimbursement for those expenses. Keep a mileage log with the date, destination, purpose, and miles for each trip. Submit on time.

Employer Protections

Employers are not liable if:

• They did not authorize or require the travel
• The employee failed to follow the company's written expense reimbursement policy

This is why documentation matters on both sides. A clear policy protects the employer. A complete mileage log protects you.

Self-Employed and Gig Workers in Illinois

The reimbursement law applies to W-2 employees only. If you are self-employed or work as a 1099 contractor, including Uber, DoorDash, and Lyft drivers in Chicago, you deduct business mileage on Schedule C instead.

Illinois has a flat state income tax of 4.95%. Your federal mileage deduction on Schedule C also reduces your Illinois state taxable income. At 15,000 business miles, that is a $10,875 deduction, saving you roughly $538 on state taxes alone, on top of your federal savings.

FAQ

Does my employer have to reimburse mileage in Illinois?

Yes. Under 820 ILCS 115/9.5, employers must reimburse all necessary work-related expenses, including business mileage. Non-compliance is treated as unpaid wages.

What is the mileage reimbursement rate in Illinois?

Illinois does not set a state-specific rate. The 2026 IRS rate of 72.5¢/mile is the standard benchmark. Reimbursement at or below this rate is tax-free.

How long do I have to submit mileage expenses?

30 calendar days from the date you incur the expense, unless your employer's written policy allows more time.

What if my employer refuses to reimburse?

File a complaint with the Illinois Department of Labor or pursue private legal action. You may recover the unpaid amount plus interest and attorney's fees.

Can W-2 employees deduct mileage in Illinois?

No. The mileage deduction for W-2 employees was permanently eliminated under the One Big Beautiful Bill. However, Illinois requires your employer to reimburse you under 820 ILCS 115/9.5.

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