The 2025 Standard Mileage Rate Increases by Three Cents

The long-awaited announcement is here! The Internal Revenue Service has once again set and released the optional standard mileage rate for business travel mileage reimbursement for the upcoming year. For 2025, the IRS mileage rate is 70 cents, a three-cent increase from 2024’s mileage rate of 67 cents per mile. 

This announcement, which was made on December 19, 2025, applies to all electric, hybrid-electric, gasoline, and diesel-powered conventional vehicles (cars, vans, pickups or panel trucks). The IRS standard mileage rates for medical or moving miles driven and for charitable service have not changed from 2024’s rates of 21 cents and 14 cents per mile, respectively.

The three-cent hike in the standard mileage rate going into the new year follows a trend of rate increases that began at the end of 2021, when the IRS set the mileage rate at 58.5 cents per gallon for the beginning of 2022. Six months later the IRS made a rare mid-year update, bumping the 2022 standard mileage rate up a whopping four cents to account for the massive spike in gas prices that year. Even as the price of fuel stabilized, the rate rose again in 2023 and 2024, mostly due to the high costs of vehicle insurance and repair caused by labor shortages, supply chain issues, overseas conflict, and economic inflation.

Every year, the IRS calculates the annual standard mileage rate following an analysis of costs associated with owning and operating a vehicle in the United States. Mileage rates sometimes have a tendency to rise or fall with national trends in gas prices, but fuel isn’t the only factor looked at when factoring the standard mileage rate. A CompanyMileage analysis found that while gas prices do have a sizeable impact on the cost of owning and operating a vehicle, at about 30% of the overall cost, depreciation is the biggest factor impacting the cost of maintaining a motor vehicle, representing about 45%. Insurance accounts for 12%, licenses, registration and taxes for 7%, and tires and maintenance cost about 3% each.

Even the most minute adjustments to the standard mileage rate can have a big financial impact on businesses with mobile employees who need reimbursement for work-related travel in their personal vehicles. For example, if a worker drives 10,000 reimbursable miles a year for their employer, raising the mileage rate by just three cents means $300 more dollars in that worker’s pocket. In the grand scheme of things paying that extra $300 in reimbursement may seem trivial, but if your business has 300 employees, your mileage reimbursement expenses increase by a total of $90,000.

With a few notable exceptions, the 2025 IRS standard mileage rate is optional for businesses to adopt. Organizations that reimburse employees have the option—in most cases—to use a different rate for reimbursement, but most companies choose to use the IRS’s rate. After all, going with the existing rate is typically easier and faster than finding another way to calculate and track the cost of vehicle usage across a large fleet of mobile employees.

Make no mistake—an increase of just three cents per mile might sound small, but it will likely impact your operational costs in 2025. That’s why having efficient mileage expense management processes is more important than ever. Our suite of reimbursement software—SureMileage, SureMobile, and SureExpense—offers the perfect automated solution to keep expense management simple, accurate, and stress-free.

With our reimbursement solution, SureMileage, employees simply report the starting and ending points for each work-related trip. The software then calculates the most direct route between them and determines the reimbursement amount based on a preset rate. This rate can either align with the IRS standard mileage rate or be customized to your organization’s needs. If you would like to learn more about what rate you should be using at your company, try CompanyMileage’s rate calculator. 

Using the SureMobile app employees can enter this information on the go right from their smartphones, as well as create, edit and submit expense reports. Tracking and reporting is made even easier and more intuitive with features like Quick Capture, which lets employees log trip info with the simple touch of a button, an integrated Address Book, and on-the-fly rate changes. 

Once submitted, expense reports move through an automated approval workflow, which can be customized to best meet the needs of the specific structure of your business. After expense reports are approved, our software integrates with all major accounting and payroll systems, ensuring a smooth reimbursement process from start to finish. 

You can read the full IRS announcement here. And after you’ve communicated the 2025 rate increase to your employees, reach out to CompanyMileage for a demo to find out more about how we can help your business better manage your mileage reimbursement process.