Arkansas Drivers Brace for Mileage Rate Increases: What You Need to Know

  arkansas-drivers-brace-for-mileage-rate-increases-what-you-need-to-know.html
  Business and Finance on Wed, Aug 20th, 2025 by Arkansas Advocate

For drivers across Arkansas, filling up the gas tank is already a pinch in the wallet. Now, they’re facing another financial hurdle as the Arkansas Department of Finance and Administration (DFA) has announced increases to mileage rates, effective July 1st, 2024. These changes impact everything from reimbursement for state employees traveling on official business to how contractors are paid for work requiring vehicle use. Understanding these adjustments is crucial for both individuals and businesses operating within the state.

The DFA’s decision isn't arbitrary; it's a response to fluctuating fuel costs and operational expenses. The mileage rates, which haven't seen significant changes in recent years, are periodically reviewed and adjusted to reflect current realities. This year, the increases affect several categories of vehicles, with the most common rate for personal use passenger cars rising from 61.5 cents per mile to 67.5 cents per mile – a substantial jump of six cents.

Breaking Down the New Rates:

The changes aren't uniform across all vehicle types. Here’s a breakdown of the new mileage rates:

• Passenger Cars (Personal Use): 67.5 cents per mile (previously 61.5 cents)
• Passenger Cars (Business Use): 64.5 cents per mile (previously 59.5 cents)
• SUVs, Vans & Light Trucks (Personal Use): 63.5 cents per mile (previously 58.5 cents)
• SUVs, Vans & Light Trucks (Business Use): 60.5 cents per mile (previously 55.5 cents)
• Heavy-Duty Vehicles (Personal Use): 59.5 cents per mile (previously 54.5 cents)
• Heavy-Duty Vehicles (Business Use): 56.5 cents per mile (previously 51.5 cents)

(Source: Arkansas DFA website - see link at the end of this article for full details.)

Why These Changes Matter:

The impact of these rate increases extends far beyond just individual drivers. Several groups will feel the effects, including:

• State Employees: State employees who use their personal vehicles for official travel will receive reimbursement at the new rates. This means a slightly larger payout for those frequently traveling on state business.
• Contractors & Vendors: Many contractors and vendors working with the state are reimbursed for mileage incurred while performing services. The increased rates will affect their billing practices and potentially impact project costs.
• Non-Profit Organizations: Similar to contractors, non-profit organizations that receive state funding and require vehicle use for program delivery will also see changes in reimbursement amounts.
• Individuals Filing Tax Deductions: While the direct impact on individual taxpayers is less immediate (as mileage deductions are claimed when filing taxes), these rates serve as a benchmark and can influence IRS guidance in future years.

Understanding Business Use vs. Personal Use:

The distinction between "business use" and "personal use" is critical for determining the applicable mileage rate. Generally, business use refers to driving directly related to generating income or performing services for an employer or client. Personal use encompasses any travel not connected to business activities. The DFA provides specific guidelines on what constitutes business use, which can be found on their website (link below).

Factors Influencing Rate Adjustments:

The DFA bases its mileage rate adjustments on several factors, including:

• Fuel Costs: Fluctuations in gasoline prices are a primary driver of these changes. Higher fuel costs increase the overall expense associated with vehicle operation.
• Vehicle Operating Expenses: This includes maintenance, repairs, insurance, depreciation, and other costs related to owning and operating a vehicle.
• IRS Standards: The IRS also publishes standard mileage rates for business use, and while the DFA’s rates aren't directly tied to the IRS figures, they are considered as part of the overall assessment.

Looking Ahead:

The Arkansas DFA will continue to monitor fuel prices and operating expenses to determine when further adjustments may be necessary. Drivers and businesses should stay informed about these changes to ensure accurate record-keeping and proper reimbursement practices. While the increase might seem unwelcome, it reflects an attempt by the state to maintain fair compensation for those utilizing their vehicles for essential services and business operations.