The IRS Increases the Standard Mileage Rate for 2026 by 2.5 Cents

It’s that exciting time of year again! The Internal Revenue Service has announced the optional standard mileage rate for 2026. The IRS has set the rate at 72.5 cents per business mile, an increase of 2.5 cents from 2025’s rate of 70 cents per mile of business-related travel. 

This announcement, which was made on December 29, 2025, applies to 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 decreased half a cent from 2025’s rate to 20.5 cents per mile and remained the same at 14 cents per mile for charitable service. 

Every year, the IRS calculates the standard mileage rate following an analysis of the costs of owning and operating a vehicle in the United States. While we all know the impact gas prices can have on this rate, fuel isn’t the only factor that gets accounted for in calculating the standard mileage rate. A CompanyMileage analysis found that while fuel costs represent about 21.1% of vehicle cost, the biggest factor that impacts the cost of owning and operating a vehicle is depreciation, which represents about 28.3%. Insurance accounts for 16.2%, licenses, registration and taxes for 7.7%, and tires, repairs and maintenance cost for 14.3%. 

Even small adjustments in the standard mileage rate from one year to the next can make a noticeable difference at the end of a fiscal year. For example, if a mobile employee drives 10,000 reimbursable miles a year as part of their job-related duties, increasing the mileage rate by just 2.5 cents means an additional $250 in that employee’s pocket. That extra $250 in reimbursement might not seem like too large an expense for a single employee, but if your business has, say, 300 employees, that means your mileage reimbursement expenses will go up by $75,000. 

The increase of 2.5 cents from last year follows the upward trend of IRS mileage rates that has been unbroken since the beginning of 2022. That year saw a rare mid-year mileage rate increase, with the 2022 standard mileage rate going from 58.5 to 62.5 cents per mile to account for that year’s massive spike in the cost of fuel. This year’s rate hike also reflects upward trends in the costs of auto insurance and of both new and used vehicles, which we believe contributed to the IRS rate increase between 2024 and 2025, as well. 

As always, the IRS 2026 standard mileage rate is optional for businesses to adopt. In most cases, organizations that reimburse their mobile employees for work-related travel have the option to use a different rate, but most choose to stick with the rate set by the IRS. However, for businesses that do want to use a mileage rate more tailored to costs in their own region, CompanyMileage has a free rate calculator.

Manage Mileage Reimbursement More Effectively in 2026

No matter what the mileage rate may be, it’s always crucial that your business have the expense management systems in place to meet whatever challenges the new year might offer. That’s why CompanyMileage created our suite of automated reimburse software, SureMileage, SureMobile, and SureExpense, which keeps travel expense management easy, accurate, and intuitive.

Our mileage reimbursement solution, SureMileage, requires that employees simply enter the start and end points for each work-related trip into the system. From there, based on the rate your company is using, SureMileage automatically calculates the best route between those two points, as well as the amount for reimbursement. This method keeps ineligible and inaccurate mileage counts out of reimbursement processes, while taking the burden of tracking, logging and calculating mileage off of your hardworking employees.

Our mobile app, SureMobile, takes this ease and efficiency one step further by giving employees the power to track trips, upload receipts, and submit expense reports right from their smartphones. SureMobile also offers an integrated Address Book, all-device compatibility, and one-touch reporting with our QuickCapture feature to ensure a user-friendly experience for on-the-go employees.

You can read the IRS’s full rate announcement here. After you’ve communicated changes to your employees, contact CompanyMileage to find out more about how we can help you optimize reimbursement, and even save money in the process!