A written expense policy tells employees what the company will pay for and how to claim it. Following the IRS "accountable plan" rules — business purpose, receipts and returning any excess — generally keeps reimbursements out of taxable wages.
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Important: please read
This template is a free starting point, not legal advice. MadyHR.ai is not a law firm and cannot give legal advice. Employment law is different in every state, and some cities have their own rules. Laws also change. Before you use this template, check it against the laws where your employees work, and speak to an employment attorney or your state labor department if you are unsure. You use this template at your own risk, and MadyHR.ai accepts no responsibility for how it is used. Links to official government websites are given for information only; MadyHR.ai is not affiliated with or endorsed by any government agency.
When to use this template
Employees travel or buy supplies for work
Remote workers with home-office costs
Setting mileage rules
Tips before you use it
Require receipts and a business purpose for each expense, and set a deadline for claims.
Use the current IRS standard mileage rate if you reimburse by the mile — it changes, so link to the IRS rather than hard-coding a number.
Some states require employers to reimburse all necessary business expenses.
Rules in your state may differ. Federal law sets the minimum. Your state — and sometimes your city or county — may add extra rules on this topic. Check with your state labor department before you use this template.
Find your state labor office (U.S. Department of Labor)
Template preview
Replace everything in [brackets] and delete the notes for employers before you use it. The Word download contains the full template.
[Company Name]
Expense Reimbursement Policy
What we reimburse
[Company Name] reimburses reasonable, necessary expenses incurred for company business and approved in advance by [Manager Name or Title], including:
Business travel (economy fares, standard hotels)
Meals while traveling on business, up to $[Number] per day
Business mileage in a personal vehicle at the current IRS standard mileage rate
[Other approved expenses]
What we do not reimburse
Personal expenses, fines or traffic tickets
Upgrades without approval
[Other excluded items]
How to claim
Complete an expense report with the date, amount and business purpose of each expense.
Attach itemized receipts.
Submit it to [Manager Name or Title] within [Number] days of the expense.
Return any unused advance within [Number] days.
Payment
Approved expenses are reimbursed [with the next paycheck / by direct transfer within 14 days].
This policy is not a contract of employment and does not change the at-will nature of employment with [Company Name]. [Company Name] may change this policy at any time, and will apply it in line with federal, state and local law.
I have received and read this policy, and I understand it.
An IRS arrangement under which expense reimbursements are not treated as wages. Generally, expenses must have a business connection, be substantiated within a reasonable time, and any excess advance must be returned. IRS Publication 463 and Publication 15 explain the rules.
Do I have to reimburse employee expenses?
Federal law does not generally require it, unless unreimbursed costs push a non-exempt employee's pay below minimum wage. Some states, including California, require reimbursement of necessary business expenses.
Official sources
Each source below is an official U.S. government website. Check them for the latest rules.
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