The Internal Revenue Service has released the updated optional standard mileage rates for 2026, increasing the business rate to 72.5 cents per mile. The new rate goes into effect Jan. 1, 2026, and applies to the use of cars, vans, pickups, and panel trucks, including fully electric and hybrid vehicles, as well as gas and diesel-powered models.

What are the 2026 Standard Mileage Rates?

Beginning Jan. 1, 2026, the IRS mileage rates are:

• 72.5 cents per mile driven for business use (up 2.5 cents from 2025)

• 20.5 cents per mile driven for medical purposes (down 0.5 cents from 2025)

• 20.5 cents per mile driven for moving purposes for certain active-duty military members and certain members of the intelligence community (down 0.5 cents from 2025)

• 14 cents per mile driven in service of charitable organizations (unchanged)

The IRS notes the business mileage rate is based on an annual study of fixed and variable costs, while the medical and moving rates are based on variable costs only. The charitable rate is set by statute.

Why the Mileage Rate Matters for Fleets and Employers

For companies reimbursing drivers who use personal vehicles for work, the IRS mileage rate is often used as a benchmark because it helps define the tax-free reimbursement ceiling for mileage-based plans. Employees and eligible taxpayers may also use it to calculate deductible vehicle costs, depending on their situation.

To put the change into perspective, a driver logging 10,000 business miles per year would see reimbursement rise by about $250 versus 2025, if reimbursed at the standard rate.

Motus, a vehicle reimbursement provider, said the increase reflects rising ownership costs even as fuel prices cooled in 2025. According to Motus, factors such as vehicle prices, insurance, maintenance, and depreciation continue to drive the cost of operating a vehicle for work.

Standard Rate vs. Actual Expenses

The IRS reminds taxpayers that the standard mileage rate is optional. Taxpayers may instead choose to calculate the actual costs of using their vehicle.

However, taxpayers using the standard mileage rate for a vehicle they own and use for business must choose to use the rate in the first year the automobile is available for business use. In later years, they can choose to use the standard mileage rate or actual expenses.

For a leased vehicle, taxpayers using the standard mileage rate must employ that method for the entire lease period, including renewals.

A Few Other Details Fleets May Want to Note

Notice 2026-10 also includes updates relevant to reimbursement and employer-provided vehicle programs. The IRS set the depreciation portion of the business mileage rate at 35 cents per mile for 2026, used when calculating basis reductions under the standard mileage method. 

The notice also sets a $61,700 cap on the vehicle value used for certain reimbursement and valuation rules, including FAVR plans and employer-provided vehicle valuation methods such as the cents-per-mile rule and fleet-average valuation rule.

More details are included in Notice 2026-10, which also outlines maximum automobile cost and employer-provided vehicle valuation rules for 2026.