Expense Reimbursement Policy

An expense reimbursement policy says what the company pays back, how to claim it, and by when. Written well, it does two further jobs. It qualifies as an accountable plan under IRS rules, which keeps reimbursements out of employees' taxable wages and off the company's payroll tax bill. And it meets the state laws, now in eleven jurisdictions, that require employers to reimburse necessary business expenses, including the phone and internet costs of remote work, whether or not the policy mentions them.

The generator below writes a policy that does both. The rest of the page covers the accountable plan rules, the 2026 mileage and per diem figures, the state laws and what they add, and the handful of choices (receipt thresholds, deadlines, stipends) that decide whether the policy is followed.

Expense reimbursement policy generator

The accountable plan rules

IRS Publication 463 sets three conditions for reimbursements to be excluded from wages. The expense must have a business connection: incurred while performing services as an employee. It must be substantiated within a reasonable period, which the IRS treats as 60 days under its safe harbour: the amount, date, place and business purpose, with receipts for lodging at any amount and for other expenses of $75 or more. And any excess advance must be returned within a reasonable period, 120 days under the safe harbour. A policy that misses any of the three makes every reimbursement taxable wages, which is an expensive way to save paperwork.

The generator's thresholds are tighter than the IRS minimums on purpose: a $25 receipt rule and a 30-day deadline are easier to enforce than $75 and 60 days, and they keep the claims close to the events they describe. Commuting between home and the normal workplace is never reimbursable under the plan; travel between workplaces, to clients and from a home office that is the principal place of work is.

2026 mileage and per diem

Employers may reimburse mileage at any rate; above the IRS rate the excess is wages, below it the employee bears the difference and, in the states below, may be entitled to claim actual costs instead. Per diem reimbursement at or below the GSA rate needs no meal receipts, which is the main reason to choose it; the travel policy page covers the booking and class rules that sit alongside.

The state laws

Eleven jurisdictions require employers to reimburse employees for business expenses, and the broadest of them cover the costs of remote work. California (Labor Code 2802), Illinois, Montana, New Hampshire, North Dakota and South Dakota require reimbursement of all necessary expenses an employee incurs at the employer's direction, which California courts have held includes a reasonable share of a personal phone plan and home internet when their use is required. Iowa requires reimbursement of expenses authorised by the employer, within 30 days; Minnesota covers equipment used for work other than tools of the trade; Massachusetts, New York and the District of Columbia have narrower rules tied to specific categories or to expenses that would take pay below the minimum wage; and Seattle has a local ordinance. Pennsylvania's rule is limited to deductions.

Three consequences for the policy. A flat stipend for remote work is lawful in the broad states only if it covers the actual business share, so the generator lets employees in those states claim actual costs instead. A submission deadline cannot extinguish a claim the state requires to be paid, so the policy says late claims "may be declined, except where state law requires reimbursement". And a policy that does not mention remote expenses at all does not avoid them; it just means the claims arrive without a process. The cell phone policy and remote work policy pages cover the same ground from the device and the location side.

The choices that decide whether it is followed

• Deadline: 30 days is the common setting. Shorter is unrealistic for travellers; longer produces the quarterly pile that finance dreads.
• Receipt threshold: $25 to $50. Every receipt for every coffee is a policy nobody follows; no receipts below $75 is a policy nobody can audit.
• Payment time: within one payroll cycle of approval, and separately identified so it is not mistaken for pay. Employees who front costs for six weeks stop fronting them, and the work stops with them.
• Pre-approval limit: a single dollar figure above which approval is needed first, applied to everything, rather than a category list.
• One system: photo of the receipt, purpose, submit. Policies fail at the spreadsheet stage.
• A named route for disputes, because a declined claim for a required expense is a wage claim in waiting; the complaint form page covers the handling.

Key takeaways

• A reimbursement policy should be an IRS accountable plan: business connection, substantiation within 60 days, return of excess advances within 120 days. Otherwise reimbursements are taxable wages.
• 2026 mileage: 72.5 cents to June 30, 76 cents from July 1. Standard per diem for fiscal 2026: $110 lodging, $68 meals and incidentals.
• Eleven jurisdictions require reimbursement of business expenses; California and five others cover all necessary expenses including the business share of personal phone and internet.
• Stipends must cover actual costs in the broad states; deadlines cannot extinguish legally required claims.
• 30-day deadline, $25 to $50 receipt threshold, payment within one payroll cycle, one pre-approval limit, one system.