Current IRS Mileage Rate: Reimbursements, Rules, and Compliance (Updated for 2026)
Andjelka Prvulovic
Last update on:
February 6, 2026 7:50 AM
Published on:
TL;DR
What is the federal reimbursement rate for mileage?
As of January 1, 2026, the federal mileage reimbursement rate set by the IRS is 72.5 cents per mile for business use, 20.5 cents per mile for medical and qualifying moving purposes, and 14 cents per mile for charitable driving. This article explains the IRS mileage rates, how mileage reimbursement works, and when employers are required to reimburse mileage under state law.
Every year, the IRS updates its mileage rates — the cents-per-mile figures that businesses and taxpayers use to calculate deductible driving costs. These rates reflect the average expenses of owning and operating a vehicle, from fuel and maintenance to insurance and depreciation.
If you manage a team or reimburse employees for mileage, it’s worth reviewing your mileage reimbursement policy once these new rates are released. That way, you’ll keep things fair, compliant, and easier to manage when tax season rolls around.
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Effective January 1, 2026, the IRS updated the optional standard mileage rates to reflect inflation and vehicle cost changes:
Business:72.5¢ per mile (↑ 2.5¢ from 2025)
Medical:20.5¢ per mile (↓ 0.5¢)
Moving (eligible active-duty military & certain intelligence roles):20.5¢ per mile (↓ 0.5¢)
Charitable:14¢ per mile (no change)
These rates apply to gas, diesel, hybrid, and fully electric vehicles and are used to calculate deductible vehicle expenses.
How will the 2026 IRS mileage rate impact your business?
The increase in the 2026 business mileage rate to 72.5 cents per mile reflects higher overall vehicle costs, including insurance, maintenance, and depreciation. For employers, this means mileage reimbursement expenses are likely to rise—especially for teams that drive frequently as part of their role.
Even a 2.5-cent per-mile increase can add up quickly when applied across thousands of business miles over the year. For organizations with mobile or field-based employees, this makes mileage reimbursement a more meaningful line item in the budget.
This is another reason why reliable mileage tracking apps can save your company money: they enhance employee accountability and enable accurate mileage recording.
Managing mileage reimbursement effectively is crucial for various types of businesses and self-employed individuals.
Explore our
Guide to Employee Mileage Reimbursement
to learn the best practices for reimbursing your teams accurately and efficiently.
For a quick and easy way to determine reimbursement amounts, use our
Free Mileage Reimbursement Calculator
,
designed to simplify your budgeting and expense management.
Effective January 1, 2025, the IRS set the following optional standard mileage rates:
Business: 70¢ per mile
Medical: 21¢ per mile
Charitable: 14¢ per mile
These rates apply to cars, vans, pickups, and panel trucks, including gas, diesel, hybrid, and fully electric vehicles. They are used to calculate deductible vehicle expenses and to guide employer mileage reimbursements.
The medical rate is lower than the business rate because it reflects a narrower set of driving costs. The charitable rate is set by federal law and has remained unchanged for many years.
Historical IRS mileage rates
What was the IRS mileage rate for 2024?
The IRS mileage reimbursement rates for 2024 reflected higher operating costs compared to prior years.
The updated rates applied for the full calendar year.
The IRS officially published its optional standard mileage rates for 2024 as follows:
67 cents per mile for business use
(an increase of 1.5 cents from the 2023 IRS mileage rate)
21 cents per mile for medical or moving purposes
for qualified active-duty members of the Armed Forces
(down 1 cent from 2023)
14 cents per mile for mileage driven in service of charitable organizations
These rates took effect on January 1, 2024 and remained in place through the end of the year.
What was the IRS mileage rate in 2023?
In 2023, the IRS rate for business-related mileage was set at 65.5 cents per mile.
Meanwhile, the standard rate for mileage related to medical or moving purposes was 22 cents per mile.
The IRS officially published its optional standard mileage rates for 2023 on December 29th:
65.5 cents per mile driven for business purposes (up 3 cents from the second half of 2022)
22 cents per mile driven for medical/moving purposes (unchanged from the second half of 2022)
The rate per mile for charitable purposes remains at 14 cents
These rates came into effect on January 1, 2023 and remained in place through the end of the year.
What were the IRS mileage rates in 2022?
After rates decreased in 2020 and 2021, mileage rates for business travel and medical or moving
purposes went up in 2022 due to rising fuel, insurance, and vehicle costs.
The IRS officially published its optional standard mileage rates for 2022 on December 17th:
58.5 cents per mile driven for business purposes (up 2 cents from the 2021 rate)
18 cents per mile driven for medical/moving purposes (up 2 cents from the 2021 rate)
The rate per mile for charitable organizations remains at 14 cents
Due to increasing gas prices, the IRS raised the standard mileage rates again for the second half of 2022,
effective July 1st:
62.5 cents per mile driven for business purposes
22 cents per mile driven for medical/moving purposes
14 cents per mile in service of charitable organizations (unchanged)
IRS mileage rates for 2021 and previous trends
The IRS mileage rate for 2021 was issued on December 22nd, 2020.
From January 1st, 2021 through January 1st, 2022, the optional standard mileage rates were:
56 cents per mile for business purposes (down 1.5 cents from 2020)
16 cents per mile for medical/moving purposes (down 1 cent from 2020)
14 cents per mile for charitable purposes (set by statute)
These rates declined slightly from 2020 before increasing again in 2022
as fuel and insurance costs rose.
Historical mileage rates overview
Over the last decade, IRS mileage rates have fluctuated in response to economic conditions,
fuel prices, and vehicle ownership costs.
Business mileage rates increased steadily through 2019, declined during 2020–2021,
and then rose again beginning in 2022.
Medical and moving rates followed a similar pattern, while the charitable mileage rate
has remained fixed at 14 cents per mile due to statutory limits.
For comprehensive information on the topic, please refer to our detailed article on historical IRS mileage rates.
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How are mileage rates set, and what factors determine the IRS mileage rate for 2026?
1. Fuel costs play a significant role in determining the mileage rate. Fluctuations in gasoline prices are a primary driver. For instance, when fuel prices are rising, such as during the post-COVID recovery phase, the IRS often increases the mileage rate to help taxpayers offset higher fuel expenses.
2. Vehicle maintenance and depreciation are also critical factors. Each year the IRS assesses the average costs of vehicle repairs, maintenance, and depreciation. Increased maintenance costs resulting from increased labor or parts prices can often lead to higher mileage rates.
3. Insurance and registration fees vary from state to state and yearly, influencing the overall mileage rate. For example, the hurricanes and wildfires seen in 2017 and 2018 led to a surge in insurance claims, causing premiums to rise in 2019. These increased insurance costs were one of the reasons the IRS raised the mileage rate for business use.
4. General inflation and economic conditions affect all aspects of vehicle operation, from fuel and tires to routine services. The IRS accounts for inflation to ensure the mileage rate remains aligned with current economic conditions.
For example, the COVID-19 pandemic initially caused a decrease in driving as lockdowns and remote work became widespread. Insurers responded by issuing refunds and maintaining or even lowering rates temporarily.
However, as normalcy returned, supply chain disruptions and labor shortages increased the cost of car repairs, contributing to higher insurance premiums. The IRS took these rising costs into account when establishing the 2026 mileage rate.
What does the business mileage rate cover?
If your employees use their personal vehicles for work-related purposes, it’s good to know that the same IRS mileage rate applies to all types of automobiles (cars, vans, pickup trucks, and panel trucks).
The mileage rate the IRS sets includes variable and fixed vehicle operating costs. Variable costs include maintenance (like periodic oil changes and tire rotations), gas, oil, and repairs.
On the other hand, insurance, registration, lease payments, and depreciation fall under the fixed costs of operating a vehicle.
Keep in mind that IRS mileage rates don’t cover tolls or parking fees. Additionally, these rates don’t vary by geographic location either.
When it comes to reimbursing vehicle expenses, businesses have several options, each with its own advantages and disadvantages.
Understanding these methods can help you select the most effective approach for your organization.
Standard mileage rate
A standard mileage rate is the most straightforward method. Under this approach, you multiply the IRS standard mileage rate by the number of business miles driven. This method simplifies the reimbursement process by eliminating the need to track individual vehicle expenses such as gas, maintenance, and insurance.
Typically, businesses must choose the standard mileage rate in the first year the vehicle is used for business purposes. If the vehicle is leased, this method must be consistently applied throughout the lease term, including any extensions or renewals.
The simplicity and ease of record-keeping make the standard mileage rate a popular choice for many companies.
Actual expense method
Alternatively, the actual expense method allows businesses to deduct the actual costs of operating a vehicle for business purposes. This includes expenses like gas, oil changes, repairs, insurance, and depreciation.
Unlike the standard mileage rate, the actual expense method requires detailed record-keeping and meticulous tracking of all vehicle-related costs. While this method can be more time-consuming, it may offer greater tax benefits for businesses with higher vehicle operating costs.
After the initial year of business use, taxpayers can switch between the standard mileage rate and the actual expense method, depending on which option provides a more advantageous tax outcome.
FAVR
Another option is the Fixed and Variable Rate (FAVR) model, which combines a fixed monthly allowance with a variable rate based on actual mileage driven.
This hybrid approach balances predictable budgeting with fairness, as employees receive a consistent base allowance while also being reimbursed for the miles they actually drive for business purposes.
Car allowance
Lastly, some enterprises opt for a flat rate allowance, providing employees with a fixed monthly reimbursement regardless of the number of miles driven. While this approach simplifies budgeting and payroll processing by offering a predictable expense, it can lead to overpayments if employees drive fewer miles than anticipated.
Additionally, flat rate allowances may incur additional taxes if the reimbursement exceeds the actual costs of work-related driving.
As a result, many companies prefer the per-mile reimbursement model, which aligns more closely with actual vehicle usage and helps prevent unnecessary expenses.
Choosing the right reimbursement method depends on your specific business needs. While car allowances may appear practical, they can result in overpaying employees and additional tax liabilities.
On the other hand, per-mile reimbursement based on the IRS standard mileage rate or the FAVR model tends to be more cost-effective and aligns better with actual usage, making it a preferred choice for most companies. Carefully evaluate your business's unique circumstances and consult with a tax professional to determine the most beneficial reimbursement strategy.
Do companies need to reimburse mileage at the IRS rate?
Federal law does not require employers to reimburse their employees for mileage. The 2026 IRS mileage rate is optional, just like the standard mileage rates for previous years.
However, state mileage reimbursement laws may apply in some jurisdictions, so employers must be mindful of state labor laws to remain compliant. In California, according to Labor Code 2802, employers must cover their employees’ business expenses, including the costs incurred when using their private vehicles for business purposes. If businesses are found to be non-compliant, they can face costly fines and lawsuits.
Mileage reimbursements are tax-free to the employer and the employee unless the reimbursement amount is higher than the actual cost of work-related driving.
In this case, the reimbursement would be considered taxable income.
Automated mileage tracking - The future of reimbursement expense management
Unfortunately, the traditional mileage tracking and record-keeping measures come with numerous issues. Manual mileage logs can be falsified by employees and are often found to contain mistakes.
Technological advances have eliminated the need to use pen-and-paper mileage logs, as there are many software solutions on the market today that automate mileage tracking and reimbursement expense management.
How can Timeero help me improve mileage tracking?
The best mileage tracking apps are designed to help you easily track business miles driven by your employees. Tracking apps such as Timeero, reduce the time drivers spend entering trip details by automatically recording GPS location throughout the workday.
Timeero can significantly boost your mileage tracking with its unique features.
Automated real-time tracking
Timeero excels in tracking your employees’ real-time location and mileage, offering a dynamic and automated approach to mileage tracking.
Timeero automatically tracks the mileage of employees who are driving on the clock.
With the help of drive detection technology, Timeero automatically begins tracking mileage when the predetermined speed threshold is met. With this feature in play, Timeero eliminates the need for manual input, which reduces errors and ensures accurate mileage records.
Segmented tracking
One of Timeero’s standout features is segmented mileage tracking. This tool divides an employee’s driving route into individual segments based on stops. You can open each stop on the map to display details such as:
Starting and ending times of business trips
Time spent at various job sites
Driving speed
Segmented Tracking provides managers with a birds-eye view of employee workdays.
To use segmented tracking, employees only need to clock in once at the start and once at the end of their workday. Employees do not need to clock in and out several times a day as they make multiple stops. The app captures all work-related activities throughout the day without employees needing to lift a finger.
This tool provides valuable insights into your employees’ driving behaviors, such as excessive speeding and unauthorized detours. With a reliable travel log, you can quickly address unwanted behaviors and enforce company policies.
Commuter mileage
Timeero allows you to easily distinguish between business and commuter mileage. Timeero’s commuter mileage feature can be configured to log mileage only when an employee travels beyond a predefined distance from their home to the workplace.
With this feature enabled, you can ensure that non-reimbursable commuting mileage is excluded from business mileage logs.
Shortest distance and suggested mileage for cost efficiency
Timeero’s shortest distance and suggested mileage feature helps you minimize fuel costs and reduce overall mileage reimbursement by ensuring that your employees follow the most efficient routes.
If you add locations to job assignments, the app will recommend the shortest driving route.
Timeero lets you view actual vs. suggested routes.
After each business trip, the app compares the actual mileage driven vs. the suggested distance.
Route replay for employee accountability
The route replay feature provides detailed insights into the routes taken by your employees.
Replay your employees' routes in detail.
The route replay overview shows breadcrumbs with timestamps and vehicle speed details, allowing managers to verify if their crew adheres to the suggested routes. This feature can promote employee accountability and significantly enhances your team's efficiency.
Smooth mileage reimbursement with accurate reporting and integration
Besides its advanced tracking features, Timeero streamlines the mileage reimbursement process by generating accurate and detailed reports based on precise and verifiable data.
Generate accurate mileage reports with just a few clicks.
Timeero's integrations with popular accounting and payroll software, such as QuickBooks, ADP, and Gusto, simplify the reimbursement process, reducing administrative overhead and minimizing the potential risk for errors.
To learn more about how Timeero can benefit your business, read our detailed Timeero review. If you would rather see Timeero’s features first hand, sign up for a free trial today.
Key takeaways
Standard IRS mileage rates are set each year in December for the upcoming year. On the federal level, these rates are optional and non-binding for employers. In some cases, state laws apply, and companies may be required to reimburse their employees to stay legally compliant.
Using the standard IRS mileage rate in 2026 may be the best way to develop an efficient and fair mileage reimbursement policy, as it provides employers with tax-deduction benefits.
Additionally, implementing the standard IRS mileage rate is a great way to attract and retain high-quality employees, the most valuable asset of every enterprise.
The IRS typically announces mileage rates in December for the upcoming year. In rare cases, it issues a mid-year adjustment if fuel or operating costs rise sharply.
What is the IRS standard mileage rate for 2026?
For 2026, the IRS standard mileage rate is 72.5 cents per mile for business use. The rate is 20.5 cents per mile for medical purposes and for qualifying moving expenses for eligible active-duty military members and certain intelligence personnel. The charitable mileage rate remains 14 cents per mile. These rates take effect on January 1, 2026 and apply to gasoline, diesel, hybrid, and fully electric vehicles.
Does the IRS mileage rate include gas?
Yes. The standard mileage rate factors in the average cost of gas along with other operating costs like insurance, depreciation, repairs, and maintenance. You do not deduct gas separately if you use this method.
Does the IRS mileage rate include tolls and parking?
No. Tolls and parking fees are not included in the standard mileage rate. They can be deducted separately in addition to your mileage deduction.
What’s the difference between the standard mileage rate and actual expenses?
With the standard mileage rate, you multiply IRS cents-per-mile by the miles driven. With the actual expense method, you track all vehicle costs (gas, repairs, insurance, depreciation) and deduct the portion used for business.
Do employers have to reimburse at the IRS rate?
No. Employers are not required to follow the IRS rate. However, many do because it ensures reimbursements are tax-free. Some states, such as California, require “reasonable reimbursement,” making the IRS rate a widely accepted benchmark.
Can I switch between the mileage rate and actual expenses?
Once you use the actual expense method for a vehicle, you generally cannot switch back to the standard mileage rate for that same vehicle. Starting with the standard mileage rate gives you flexibility if you want to change later.
What records do I need to keep for IRS compliance?
You must keep a mileage log showing the date, purpose of the trip, and miles driven. Digital mileage tracking apps like Timeero simplify recordkeeping and provide IRS-ready reports.
Automate mileage tracking and simplify mileage reimbursement
Andjelka is a researcher and writer with 7+ years in digital marketing. Her background in social work and journalism has sharpened her skill in connecting with people from all walks of life. For the past 4 years, she’s specialized in time, location, and mileage tracking. Outside work, she enjoys yoga, swimming, and unwinding with her cats while listening to Leonard Cohen’s music.
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