What the 2026 IRS standard mileage rate is and how it applies to caregivers
The 2026 IRS business standard mileage rate is 70 cents per mile, and home care agencies use it as the safe-harbor reimbursement number for any caregiver driving between client visits in a personal vehicle. The rate is published by the IRS each December for the following calendar year on the official IRS standard mileage rates page.
The IRS rate is a ceiling, not a floor. The number functions as the maximum an agency can reimburse a caregiver tax-free under federal law. Anything above the IRS rate becomes taxable wages subject to FICA and income tax withholding. Anything below the IRS rate is still allowed under federal law, but agencies in California, Illinois, and Massachusetts face state-law exposure when paying less than the IRS rate because courts in those states treat it as presumptive evidence of the actual vehicle cost.
What the IRS rate covers
The 70-cent rate bundles gas, depreciation, insurance, registration, maintenance, and tires into one number. Agencies do not have to itemize these costs when paying at the IRS rate. This is the safe-harbor benefit that makes the rate the default choice for home care payroll.
The IRS publishes a separate medical and moving mileage rate of 21 cents per mile for 2026, which agencies sometimes confuse with the business rate. The medical rate applies when a person drives for their own medical care or to move for a medical reason, and it is not the rate that applies when a caregiver drives for work. Using the wrong rate undercompensates the caregiver and exposes the agency to wage claims. The charitable rate of 14 cents per mile is set by statute and applies only to volunteer driving for qualified charities.
| Mileage type | 2025 rate | 2026 rate |
|---|---|---|
| Business | $0.67 | $0.70 |
| Medical and moving | $0.21 | $0.21 |
| Charitable | $0.14 | $0.14 |
Rate changes take effect January 1. The IRS announces the new business rate in mid-December of the prior year. Agencies that run mileage payroll on a weekly cycle should update the rate in their payroll system effective the first pay period of January. Agencies that pay mileage on a delayed cycle should apply the rate that was in effect when the miles were driven, not when the reimbursement check is cut.
Which miles you must reimburse (between-client driving) and which you don't have to (home-to-first-client)
Between-client driving during the workday is compensable hours-worked under FLSA and the miles must be reimbursed; home-to-first-client and last-client-to-home commute miles are not compensable under federal law. The Department of Labor's FLSA Fact Sheet 22 on hours worked is the controlling federal guidance.
The portal-to-portal rule from the 1947 amendment to FLSA still controls home care. Under 29 USC 254, ordinary home-to-work travel is not compensable. Once the caregiver arrives at the first client of the day and begins work, every subsequent trip until the end of the workday is on the clock and the miles are compensable. The rule is mechanical and the DOL has applied it consistently since the 2015 Domestic Service Final Rule extended FLSA minimum-wage and overtime protections to most home care workers.
Miles that count under federal law
- Between consecutive client visits on the same workday.
- Trips to a pharmacy or grocery store on behalf of a client during paid hours.
- Trips to the agency office during the workday for a required meeting.
- Errands the care plan documents as part of the service.
- Mileage with a client in the vehicle for a documented outing.
- Mileage to a required training session during paid hours after the first client visit.
Miles that don't count under federal law
- Morning commute from home to the first client of the day.
- Evening drive home from the last client of the day.
- Mileage during an unpaid meal break if the caregiver leaves the client location.
- Personal errands during a paid shift that are not part of the care plan.
The DOL's portal-to-portal rule has narrow exceptions. The continuous-workday doctrine applies when a caregiver performs any work-related task before leaving home, such as logging into a scheduling app, receiving a dispatch call, or transporting required medical equipment. When the workday starts at home, the commute to the first client becomes compensable. The Sixth Circuit's decision in Kuebel v. Black & Decker (2010) and DOL Opinion Letter FLSA2020-19 both endorse this reading. Agencies that require caregivers to check schedules at home before leaving should treat the commute as paid time.
State law can override the federal rule
California treats the trip from home directly to a client visit as compensable if the agency controls the route or requires equipment transport. Multi-state operators cannot rely on the federal portal-to-portal rule as a uniform policy.
The cleanest handbook language for the federal default reads as a positive statement of what the agency pays. AveeCare recommends a one-paragraph policy that mirrors federal language: the agency reimburses miles driven between client visits at the IRS standard business rate, miles to and from the caregiver's home at the start and end of the workday are not reimbursable, and any mileage outside that pattern requires prior written approval from the scheduler.
State mandates that exceed federal rules (California, Illinois, Massachusetts, and others)
Eight states require employers to reimburse all necessary business expenses including mileage, and three of them — California, Illinois, and Massachusetts — have aggressive enforcement records against home care agencies. The state list is short, but the agencies operating in those states are responsible for some of the largest wage-and-hour settlements in home care.
California Labor Code 2802 is the country's strictest expense-reimbursement statute. The statute reads simply: an employer shall indemnify an employee for all necessary expenditures or losses incurred in direct consequence of the discharge of duties. The California Supreme Court extended the rule to mileage in Gattuso v. Harte-Hanks Shoppers (2007) and the Court of Appeal in Cochran v. Schwan's Home Service (2014) confirmed that the IRS rate is presumed to satisfy the indemnification obligation unless the employer proves a lower rate fully covers the actual cost. The California Division of Labor Standards Enforcement has published a mileage reimbursement FAQ that home care agencies in the state should treat as the operating standard.
| State | Statute | What's required | Non-reimbursement penalty |
|---|---|---|---|
| California | Labor Code 2802 | Full reimbursement of necessary business expenses including mileage | Unpaid expenses + interest + attorneys' fees; PAGA exposure |
| Illinois | 820 ILCS 115/9.5 | Reimbursement for necessary expenditures within scope of employment | Unpaid expenses + interest; class-action exposure |
| Massachusetts | M.G.L. c. 149 sec. 148 | Reimbursement of expenses incurred during work | Treble damages + attorneys' fees |
| North Dakota | Century Code 34-02-01 | Indemnification for expenses incurred in direct consequence of employment | Unpaid expenses + interest |
| South Dakota | SDCL 60-2-1 | Indemnification for expenses incurred | Unpaid expenses |
Illinois enforcement has accelerated since the 2019 amendment. The Illinois Wage Payment and Collection Act was amended effective January 1, 2019 to add Section 9.5, which requires employers to reimburse employees for all necessary expenditures or losses incurred within the scope of employment and directly related to services performed for the employer. The statute is enforced through both state Department of Labor complaints and private class actions, and home care agencies operating in Illinois have been named in several large unreimbursed-mileage settlements since 2020. The text lives at 820 ILCS 115/9.5.
Massachusetts treble-damages exposure changes the math. The Massachusetts Wage Act at M.G.L. c. 149 sec. 148 requires reimbursement of business expenses and the enforcement penalty is mandatory treble damages plus attorneys' fees when an employer is found to have violated the statute. The Massachusetts wages laws hub covers the framework. A $400-per-month unreimbursed mileage gap across 40 caregivers becomes $576,000 in treble exposure annually before fees, which is the math that has driven settlement values in the state.
Even non-mandate states have a floor
If unreimbursed mileage pushes a caregiver's effective wage below the state minimum, the agency has a federal FLSA violation regardless of whether the state has an expense-reimbursement law. The federal kickback rule at 29 CFR 531.35 makes this enforceable nationwide.
A handful of additional states have broader expense-reimbursement laws that agencies operating multi-state should know. Iowa Code 91A.3(6) requires reimbursement of necessary expenses incurred by the employee in the discharge of employment. Montana Code 39-2-701 obligates indemnification of necessary expenditures. New Hampshire RSA 275:57 covers reasonable expenses incurred. Pennsylvania has no general statute, but collective bargaining agreements in unionized home care operations often add mileage as a contractual term.
Multi-state agencies need a state-specific policy section in their handbook. The simplest structure is a base policy at the IRS business rate with a per-state addendum listing the eight mandate states and any contractual overrides. The mistake AveeCare sees most often is a one-size-fits-all policy written from a single-state perspective, which works fine until the agency hires its first California caregiver and inherits PAGA exposure.
Per-mile vs flat-stipend: how agencies actually pay for mileage
Most home care agencies pick one of two methods: per-mile reimbursement at the IRS rate, or a flat monthly vehicle stipend; per-mile is administratively heavier but audit-proof, flat stipends are simpler but require a year-end true-up to stay tax-free.
Per-mile at the IRS rate is the default safe harbor. When the agency reimburses at the IRS rate based on documented miles, the reimbursement is non-taxable to the caregiver and fully deductible by the agency as an ordinary business expense. There is no actual-cost substantiation requirement because the IRS rate is deemed to cover all vehicle costs. The agency captures miles, multiplies by the rate, and pays. The math is the math.
Per-mile reimbursement
- Setup: pick the rate, write the policy.
- Monthly admin: caregiver logs miles, agency multiplies and pays.
- Audit risk: very low when records are kept.
- Caregiver perception: precise, fair, ties to actual driving.
- Math accuracy: exact to the mile.
Flat monthly stipend
- Setup: pick the dollar amount, decide accountable vs non-accountable plan.
- Monthly admin: pay the stipend; reconcile annually under accountable plan.
- Audit risk: higher; whole stipend becomes taxable if accountable-plan rules are missed.
- Caregiver perception: predictable, may under or over-pay vs actual.
- Math accuracy: off by 10 to 30 percent for any given caregiver-month.
Flat stipends become taxable income if you don't reconcile. IRS Publication 463 lays out the accountable-plan rules. To stay tax-free, a flat stipend must require the caregiver to substantiate the business mileage with adequate records within a reasonable time, and to return any portion of the stipend that exceeds the substantiated business use. Agencies that pay a flat stipend without these reconciliation steps have a non-accountable plan, which means the whole stipend is W-2 wages subject to FICA, FUTA, SUTA, and income tax withholding.
A break-even calculation helps agencies pick the right method. At the 2026 IRS rate of 70 cents per mile, a $400 monthly flat stipend equals 571 miles. A caregiver who drives more than that monthly is undercompensated by a flat stipend; a caregiver who drives less is overpaid. The interactive calculator at the top of this guide shows the break-even live for any rate and stipend combination.
Per-mile makes the most sense for agencies that already capture visit start and end locations through EVV. The mileage is incremental data on top of records the agency already keeps for Medicaid compliance. AveeCare's caregiver app links visit logs to per-trip mileage automatically, which removes the administrative weight that has historically driven agencies toward flat stipends.
How to document mileage compliantly (and what an audit looks like)
Compliant mileage documentation captures four data points per trip — date, start and end locations, miles driven, and business purpose — and the agency keeps the records for at least three years to satisfy IRS substantiation rules under Treasury Regulation 1.274-5T. The text of the regulation is published on eCFR.gov.
The contemporaneous-record rule is what trips most agencies up. Treas. Reg. 1.274-5T(c)(2)(ii) requires that the mileage record be made “at or near the time” of the expenditure. A caregiver who reconstructs a month of mileage from memory at month-end has produced a non-contemporaneous record, and the IRS or DOL can disregard it during an audit. The fix is structural: capture every trip the same week it happened, not at month-end.
What every mileage record must include
- Date of the trip — calendar day.
- Starting odometer or address — point A.
- Ending odometer or address — point B.
- Miles driven — actual or app-calculated route distance.
- Business purpose — named client visit, training, errand category, or care plan task.
Apps that auto-log GPS routes beat paper logs in DOL audits. The Tax Court has accepted GPS-logged mileage records as contemporaneous in cases including Vanicek v. Commissioner (T.C. Memo 2017-179). DOL audit practice has followed, with field offices accepting timestamped mobile-app logs that capture caregiver location at visit start and end. The records that lose audits are paper logs where the caregiver writes down miles by guess at the end of a pay period.
Records retention requirements
Three years for IRS substantiation under Treasury Regulation 1.274-5T. Two to three years for DOL wage-and-hour audits under 29 CFR 516. Four years in California for wage-statement records under Labor Code 226. Longer when state expense-reimbursement litigation is pending and discovery has begun.
A DOL wage-and-hour audit on mileage usually starts with a single complaint. The pattern is consistent across regions. A caregiver leaves the agency on bad terms, files a complaint with the state Department of Labor, the state investigator opens a wage-and-hour file, and the investigation either resolves at the state level or gets referred to the federal DOL Wage and Hour Division when the investigator finds a pattern of unreimbursed expenses across multiple employees. Agencies that have not been audited often underestimate how routine this trigger is.
AveeCare's EVV-tied mileage capture removes the contemporaneous-record problem at the source. The caregiver mobile app captures location at visit start and end, calculates the route distance between consecutive visits, and writes the mileage line to the same audit-ready record that holds the visit timestamp. The records are pre-formatted for both IRS substantiation and DOL wage-hour review.
DOL wage-and-hour audit consequences when mileage isn't reimbursed
When unreimbursed mileage pushes a caregiver's effective hourly wage below the state or federal minimum, the DOL treats the gap as unpaid wages and assesses back wages, an equal amount in liquidated damages, plus civil money penalties for willful violations under 29 USC 216. The statute is at 29 USC 216.
The kickback rule is the federal hook. 29 CFR 531.35 prohibits an employer from accepting wages that are “kicked back” to the employer through unreimbursed business expenses. When a caregiver buys gas to drive between clients and the agency does not reimburse, the cost of that gas is functionally a kickback of wages. If the kickback drops the effective hourly rate below the federal or state minimum, the agency has an FLSA violation. The rule applies in every state regardless of whether the state has its own expense-reimbursement statute.
| Violation type | What DOL collects | Typical pattern |
|---|---|---|
| Back wages | Full gap between effective wage and minimum | 2-year lookback, 3 years for willful |
| Liquidated damages | Equal to back wages | Standard unless agency proves good-faith reliance on counsel |
| Civil money penalties | Up to $2,515 per willful violation in 2026 | Per affected employee per violation |
| Attorneys' fees | Awarded to prevailing plaintiff | Often exceeds the back-wage amount in private actions |
The 2026 enforcement environment has shifted. DOL's ongoing focus on home care under the 2015 Domestic Service Final Rule has been reinforced by the 2024 Walsh memorandum on misclassification, which directs Wage and Hour Division field offices to look at expense reimbursement as a wage-and-hour issue rather than a contract issue. Home care agencies, gig-economy intermediaries, and franchised service businesses have been priority targets in recent enforcement cycles. The audit volume agencies face has not gone down even as the dollar threshold for willful-violation penalties has gone up.
California PAGA exposure stacks on top of DOL liability
A single PAGA-eligible mileage claim can trigger representative-action penalties of $100 for an initial violation and $200 for subsequent violations, per pay period, per affected caregiver. Aggregated across an agency's workforce over a one-year limitations period, PAGA exposure regularly dwarfs the underlying wage claim.
Prevention is the cheapest insurance available. Reimburse at the IRS rate, capture records contemporaneously, retain records for the required period, and write down the policy. Agencies that do these four things rarely face wage-and-hour audits on mileage and almost always win when they do.
Putting it together: a 2026 mileage reimbursement policy template for home care agencies
A defensible 2026 mileage reimbursement policy specifies the rate, the compensable categories, the documentation method, the submission cadence, and the state-specific overrides for any state where the agency operates.
Choose your rate
Default to the IRS business standard mileage rate ($0.70 per mile for 2026). Update the policy each January when the IRS publishes the new rate.
Define compensable miles
Between consecutive client visits the same day, agency-directed errands during paid time, trips to required training during paid hours, and miles with a client in the vehicle. Home-to-first-client and last-client-to-home are non-compensable under federal default, with state-specific overrides flagged.
Pick a documentation method
App-based GPS capture recommended. Paper logs are allowed but lose audits more often. The record must show date, locations, miles, and business purpose.
Set a submission cadence
Weekly with payroll is the simplest and the closest to contemporaneous. Monthly is allowed but increases reconstruction risk.
Document state-specific overrides
List California, Illinois, Massachusetts, and any other mandate state where the agency operates. Specify the rate and reimbursement scope for each.
Audit-proofing comes down to one rule. Write down what you actually do, and then actually do it. Most agencies fail audits because the policy and the practice diverge — the handbook says one thing, the payroll records show another, and the caregiver's testimony contradicts both. The simplest defense is a one-page policy, a payroll record that matches it, and a tracking app that produces evidence on demand.
AveeCare handles the documentation layer for agencies that do not want to build it. The caregiver app captures per-visit mileage automatically against the IRS rate, the agency portal exports payroll-ready mileage records by pay period, and multi-state agencies can configure per-state policy rules that apply by caregiver location of work. The AveeCare pricing page lists the included mileage capture as part of the base platform, and the self-serve interactive demo walks through a sample multi-state policy in under five minutes.
Frequently asked questions
Do home care agencies have to pay mileage to caregivers?
Federal law does not require mileage reimbursement, but federal law does require that unreimbursed business expenses cannot push a caregiver's effective hourly wage below the federal minimum wage under 29 CFR 531.35. California, Illinois, Massachusetts, North Dakota, South Dakota, Iowa, Montana, and New Hampshire have state laws that require reimbursement of all necessary business expenses including mileage, so home care agencies operating in those states must reimburse mileage as a matter of state wage law.
What is the 2026 IRS standard mileage rate?
The 2026 IRS standard mileage rate for business use is 70 cents per mile, the medical and moving rate is 21 cents per mile, and the charitable rate remains 14 cents per mile. The business rate is the relevant one for home care agency reimbursement and is announced by the IRS in mid-December of the prior year.
Does home-to-first-client driving count as compensable miles?
Under federal FLSA, the morning commute from a caregiver's home to the first client of the day and the evening drive home from the last client are not compensable hours worked and the miles are not reimbursable under the portal-to-portal rule. California has carved out exceptions when the agency controls the route or requires equipment transport, so multi-state operators should check state law.
Is a flat monthly car stipend taxable income?
A flat monthly car stipend is tax-free only if it is paid under an accountable plan as defined in IRS Publication 463, which requires that the caregiver substantiate the business mileage with adequate records within a reasonable time and return any excess amount. If the agency does not require substantiation, the entire stipend is W-2 wages subject to FICA and federal income tax withholding.
What records do I need to keep for caregiver mileage?
IRS substantiation rules under Treasury Regulation 1.274-5T require contemporaneous records showing the date of the trip, the business purpose, the destination, and the miles driven. The agency must retain these records for at least three years to satisfy the IRS, two to three years for DOL wage-and-hour audits, and four years in California under Labor Code 226 for wage-statement records.
What happens in a DOL audit if I haven't reimbursed mileage?
The DOL assesses back wages for the gap between the caregiver's effective hourly wage and the applicable minimum wage, an equal amount in liquidated damages unless the agency proves good faith, civil money penalties of up to $2,515 per willful violation in 2026, and attorneys' fees if the caregiver prevails in a private action under 29 USC 216(b). The lookback period is two years, extended to three years for willful violations.
Can I reimburse caregivers at less than the IRS rate?
Yes under federal law, as long as the reimbursement plus the wage rate keeps the caregiver's effective compensation at or above the applicable state and federal minimum wage. In California, Illinois, and Massachusetts, paying less than the IRS rate exposes the agency to litigation because courts in those states have held that the IRS rate is presumed to cover actual costs unless the employer proves a lower rate fully indemnifies the employee.
Should I use a per-mile reimbursement or a flat stipend?
Per-mile at the IRS rate is the default for agencies serving multi-client routes and is administratively simpler when the agency already captures visit start and end locations via EVV. A flat stipend works for caregivers who drive predictable amounts each month and reduces month-to-month admin, but it requires an accountable-plan reconciliation at year end to stay tax-free.
Sources
- IRS Standard Mileage Rates — Official 2026 business, medical, and charitable rates. Accessed May 2026.
- IRS Publication 463: Travel, Gift, and Car Expenses — Accountable-plan rules for vehicle stipends. Accessed May 2026.
- DOL FLSA Fact Sheet 22: Hours Worked — Federal compensable-time rules including travel. Accessed May 2026.
- DOL Home Care Final Rule — 2015 rule extending FLSA to home care. Accessed May 2026.
- California Labor Code 2802 — California expense-reimbursement statute. Accessed May 2026.
- California DLSE Mileage Reimbursement FAQ — DLSE enforcement guidance. Accessed May 2026.
- Illinois Wage Payment and Collection Act 820 ILCS 115 — Illinois expense-reimbursement statute with Section 9.5. Accessed May 2026.
- Massachusetts wages laws hub — Massachusetts Wage Act framework. Accessed May 2026.
- 29 CFR 531.35 — kickback rule — Federal regulation prohibiting wage kickbacks via unreimbursed expenses. Accessed May 2026.
- 29 USC 216 — FLSA penalties — Federal statute on back wages, liquidated damages, and civil penalties. Accessed May 2026.
- Treasury Regulation 1.274-5T — Federal regulation requiring contemporaneous mileage records. Accessed May 2026.
- GSA POV Mileage Reimbursement Rates — Federal-employee rate cross-reference. Accessed May 2026.
Image credits: caregiver-driving photo by why kei on Unsplash; gauge cluster macro by Wenniel Lun on Unsplash; notebooks photo via Unsplash+.
Cal Nesvig
Founding Partner — AveeCare
AveeCare is a home care software platform serving agencies across all 50 states with native EVV, transparent per-client pricing, and a self-serve interactive demo. This article was researched against primary federal and state sources and updated for the 2026 IRS rate publication.