The IRS announced an increase in the optional standard mileage rate for tax year 2026. The new rate of 72.5 cents per mile is up 2.5 cents from the previous year’s rate of 70 cents per mile, reflecting the rising costs of operating a vehicle for business purposes.
Updated Mileage Rates
Beginning Jan. 1, 2026, the standard mileage rates for the use of a car, as well as vans, pickups, or panel trucks, will be as follows:
- 72.5 cents per mile driven for business use, up 2.5 cents from 2025.
- 20.5 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces (and now certain members of the intelligence community) reduced by a half cent from last year.
- 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2025.
These new rates apply to electric, hybrid-electric, gasoline, and diesel-powered vehicles.
What is the Optional Standard Mileage Rate?
The optional standard mileage rate simplifies calculating deductible costs for using a car for business purposes. Instead of tracking actual expenses, this rate accounts for fixed and variable costs such as fuel, depreciation, and insurance. The federal government and businesses widely use it as a standard for reimbursing employees for mileage.
More Details on the 2026 Mileage Rates
Taxpayers can always calculate the actual costs of using their vehicle instead of using the standard mileage rates. Taxpayers should use the rates outlined in Notice 2026-10 for travel from Jan. 1 – Dec. 31, 2026.
Changes to the standard mileage rate can impact payroll administration, expense reimbursement, and overall compliance. At CBIZ, our human capital management specialists help employers align policies with current IRS guidance, so you can reduce risk while supporting employees. Explore CBIZ Human Capital Management solutions to learn more.
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