Predicting the IRS’s 2026 Standard Mileage Rate

It’s almost that time again! Halloween candy is still for sale, Christmas music is already everywhere, and the IRS is preparing to announce the IRS standard mileage rate for 2026 at the end of this year. 

The last four years have seen consistent mileage rate increases, including a jump of three cents from 2024’s 67 cent rate to the 2025 rate of 70 cents per mile. We attributed that increase to high costs of new and used vehicles, auto insurance, and the continuing priciness of repairs. Will these trends continue into 2026? And if they do, how will that impact the mileage rate? 

How the IRS Calculates the Mileage Rate

At the end of every year, the IRS calculates the standard mileage rate for the upcoming tax year by analyzing how much it costs to own and operate a vehicle in the US. In recent years, fluctuations in gas prices have caused the rate to rise, but a recent CompanyMileage analysis found that depreciation actually makes up the largest portion of vehicle ownership costs, at about 28.3%. Fuel prices account for about 21% of the overall cost, insurance for 16%, financing for 12.5%, maintenance and reapirs for about 4%, and taxes and registration for nearly 8%. 

Vehicle Cost Trends in 2025-2026

To predict what the standard mileage rate might look like in 2026, let’s take a look at some recent and some projected trends in the cost of owning and operating a vehicle.

Fuel Prices

Fuel costs aren’t the biggest factor impacting vehicle ownership costs, but when gas prices really spike, the standard mileage rate will usually reflect this. In 2022, for example, skyrocketing fuel costs caused the IRS to make a rare mid-year adjustment of the rate, raising it four whole cents to 62.5 cents per gallon for the second half of that year. 

Hopefully, nothing like that is in the cards for next year. The U.S. Energy Information Administration (EiA) has projected that the retail price of gasoline will continue to trend downward in 2026. This anticipated decrease is attributed to an expectation that global oil inventories will rise in 2026, although EIA also predicts that OPEC+ oil production will stay below announced targets, keeping prices from dropping drastically.

Of course, all of this being said, gas prices can be difficult to predict, as global supply chain factors can quickly and directly impact fuel costs. 

Vehicle Ownership, Maintenance and Repair

The already-high price of purchasing a new or used vehicle has just kept going up. In September, Kelley Blue Book estimated that in the U.S., the average transaction price (ATP) of a new car had reached $50,080, a record high. In 2026, prices will probably keep rising, driven by increased pressure from tariffs and rising shipping costs.  

While vehicle manufacturers are able to absorb rising costs to some extent, the vehicle service industry, especially small local repair shops, are particularly vulnerable to increases. 

2025 saw a 15% increase from last year in national repair costs, according to Consumer Price Index data, including a 5% jump in August alone. 

A 25% tariff on automotive parts was also implemented earlier this year, putting massive pressure on an industry already facing high costs from labor shortages and supply chain issues. There’s also the wrinkle that new cars are getting more and more technologically advanced, which makes repairs slower, more complicated, and, yes, more expensive. 

Insurance

That’s right, car insurance premiums have been trending upwards in 2025, too! In fact, the Bureau of Transportation Statistics has reported that motor-vehicle insurance has been a major contributing factor to economic inflation this year. As repair and labor costs stay high, Insurance rates are projected to continue climbing in 2026, albeit at a more modest pace than in the last two years. 

We Can’t Forget Inflation

You may have observed that the price of pretty much everything, not just cars and insurance, went up this year. Don’t worry, you’re not the only one that noticed. The IRS has announced that they’re making inflation adjustments to many tax provisions. These adjustments don’t yet immediately impact automotive costs, but they do indicate that the IRS recognizes that the cost of living has increased.

For next year, we should expect the IRS to consider inflation expectations for vehicle costs. According to Bureau of Labor Statistics data, the U.S. rate of inflation reached 3% in September. Experts predict that inflation will ease by the end of 2026, but costs will still see upward pressure. 

What Do We Predict For 2026?

In 2026, CompanyMileage predicts that the pattern of increasing the rate will hold. We predict that for next year the IRS will raise the rate by an adjustment of 1-2 cents, for a rate of 71-72 cents per mile. Vehicle costs continue climbing, and remain sensitive to global events. As owning and operating a vehicle continues to get more expensive for everyone, including your employees, we think the rate will go up again, albeit hopefully more modestly than it did last year. 

Better Mileage Management with CompanyMileage 

We can’t say with absolute certainty what the IRS standard mileage rate will be in 2026, but we do know this: You can always count on CompanyMileage to provide the most accurate, efficient, and cost-effective way to reimburse your mobile employees for their work-related travel.

SureMileage, our mileage reimbursement software, uses a unique point-to-point method to automatically calculate the distance—and mileage total for reimbursement—between the start and end points of each work-related trip. This method makes tracking faster and more efficient than slower manual methods, while keeping detours, errands, and inflated mileage estimates out of trip logs.

Employees only need a few minutes at the end of each day to organize and submit their trips from their smartphones, which they can do from anywhere using the SureMobile app. Once submitted, expense reports flow through an automated, easily customizable approval workflow. Upon approval, our software integrates with all major accounting and payroll systems to ensure payments are issued seamlessly.

No matter what the IRS sets for its 2026 standard mileage rate, CompanyMileage is ready to help you make the most of it, and even save money in the process. To learn more, contact us for a demo today!