Connecticut laws/regulations; Background;

OLR Research Report

September 20, 2011




By: Lee R. Hansen, Legislative Analyst II

You asked for information on the mileage reimbursements state employees receive and how they are used in pension calculations.


Under various statutes and collective bargaining agreements, the state reimburses all of its employees who use their private vehicles in the performance of state business and duties. Although reimbursement rates vary in some collective bargaining agreements, since January 28, 2011, the state has reimbursed all of its non-union employees and employees in 12 of its 34 bargaining units $0.51 per mile. According to the comptroller's office, mileage reimbursements for FY 11 totaled almost $7.4 million paid to 8,725 employees, not including state legislators who, according to the Office of Legislative Management, received an additional $578,000 in mileage reimbursements.

The Internal Revenue Service (IRS) requires certain mileage reimbursements to be reported as part of an employee's income. These “reportable” reimbursements are treated as part of an employee's income for tax and pension deduction purposes. As such, they are also included in the salary used to determine an employee's pension benefit when he or she retires. In FY 11, reportable mileage reimbursements totaled $598,000 of the almost $8 million paid in total mileage reimbursements. The remaining $7.4 million was “non-reportable,” and therefore not eligible to be taxed or used in calculating employees' pensions.


Table 1 shows FY 11 mileage reimbursements by department, organized by total reimbursement amount.

Table 1: FY 11 Mileage Reimbursements


Total Mileage Reimbursement

Reportable Mileage Reimbursement

Judicial Branch



Dept. of Transportation



State Legislators



Dept. of Developmental Services



Dept. of Children and Family



Auditors of Public Accounts



Commission for the Deaf and Hearing Impaired



Dept. of Mental Health & Addiction Services



Dept. of Labor



State Dept. of Education



Dept. of Banking



Community Colleges



Dept. of Revenue Services



Public Defender Services



Office of the Attorney General



Dept. of Social Services



Dept. of Insurance



Board of Education and Services for the Blind



Fire Prevention Commission



Dept. of Correction



Dept. of Public Health



Division of Criminal Justice



Dept. of Motor Vehicles



Dept. of Environmental Protection



Dept. of Public Works



Dept. of Administrative Services



Workers' Compensation Commission



Commission on Culture & Tourism



Dept. of Public Utility Control



Office of Legislative Management (not including legislators)



Probate Court Administration



Dept. of Higher Education



Office of the State Treasurer



Board of State Academic Awards



Dept. of Consumer Protection



Dept. of Economic and Community Development



Dept. of Emergency Management & Homeland Security



Dept. of Public Safety



Office of Policy and Management



Agricultural Experiment Station



Office of Protection and Advocacy for Persons with Disabilities



Dept. of Veterans' Affairs



Dept. of Information Technology



University of Connecticut Health Center



State Library



Soldiers, Sailors, & Marines Fund



Office of the Child Advocate



Commission on the Status of Women



Office of Consumer Council



Commission on Human Rights and Opportunities



Dept. of Agriculture



Division of Special Revenue



Psychiatric Security Review Board



Office of the Victim Advocate



Office of Workforce Competitiveness



Office of the Secretary of the State



Freedom of Information Commission



Commission on Aging



Office of Chief Medical Examiner



Ethics Commission



University of Connecticut



African American Affairs Commission



Commission on Children



CT Siting Council



Elections Enforcement Commission



Office of the Healthcare Advocate



Commission on Latino & Puerto Rican Affairs



Military Dept.



Judicial Selection Commission



Office of the State Comptroller



CT State University System



Council on Environmental Quality



Lt. Governor's Office



Governor's Office



Board of Accountancy







In general, a state employee's pension benefit is based on a percentage of his or her annual salary over the last few years of employment (the actual specifics of the calculation depend on the employee's tier membership). Reportable mileage reimbursements are considered part of the salary because the IRS considers them part of the employee's income for tax purposes. An employee's state and federal income taxes, Social Security and Medicare taxes, and pension fund contributions are all based on an income amount that includes reportable mileage reimbursements. Non-reportable mileage is not added into the calculation because the IRS does not consider it income (and does not tax it). Thus, an employee with a $50,000 regular salary who received $500 in reportable mileage reimbursements would have a $50,500 salary for pension and tax purposes. If the same employee received no reportable mileage and $5,000 in non-reportable mileage, he or she would have a $50,000 salary for pension and tax purposes.

Reportable vs. Non-reportable Mileage

In general, the IRS requires employees to report any mileage reimbursements that are at a rate greater than the “standard mileage rate” set by the IRS. Because the IRS current standard mileage rate is 55.5 cents per mile, a typical employee reimbursed at 51 cents per mile would not have any reportable mileage, regardless of the amount of the reimbursement. However, an employee reimbursed at 60 cents per mile would have to report the additional 4.5 cents per mile that he or she received as income (www.osc.ct.gov/2011memos/numbered/201116.htm).

The IRS also considers certain types of mileage reimbursements, such as reimbursements for commuting between home and work, as reportable, regardless of the standard mileage rate (www.irs.gov/govt/fslg/article/0,,id=181249,00.html). State employees who receive these reimbursements (i.e. state legislators or appointed Auditors of Public Accounts prior to 7/1/11) must report the total reimbursement amount as income and have it taxed and used for pension purposes. PA 11-48 prohibits Auditors of Public Accounts from receiving any mileage reimbursements during the FY 12 and FY 13 biennium.