Effective January 1, 2026, the IRS set the standard mileage rate for business use at 72.5 cents per mile. There is no limit on how many business miles you can claim, but you must properly document your mileage to receive deductions.
Starting January 1, 2026, the Internal Revenue Service (IRS) has set the standard mileage rate for business travel at 72.5 cents per mile. This rate is used to calculate mileage reimbursement – the cost of using a personal vehicle for business purposes, including gas, maintenance, wear and tear, and depreciation.
Stay on top of annual rate changes to maximize your tax savings potential. Here's everything you need to know about the IRS mileage rate for 2026.
The IRS announced the official standard mileage rates for 2026 on December 29, 2025. These rates apply to gasoline, diesel, hybrid, and fully electric vehicles (including cars, vans, pickups, and panel trucks).
Here’s the breakdown for 2026:
These rates are based on an annual study of the fixed and variable costs of operating a vehicle. For business use, the rate covers everything from fuel and maintenance to insurance and depreciation.
The IRS typically releases updated mileage rates at the very end of December, just before the new year begins, so employers can apply the new rate starting January 1.
The 2026 rates show a notable increase for business mileage, driven largely by rising vehicle ownership costs, insurance premiums, and maintenance labor rates.
While the business rate increased by 2.5 cents, the medical and moving rates decreased by 0.5 cent. The charitable rate, which is set by federal law, has remained unchanged at 14 cents per mile since 1998.
If you're curious how the rate has evolved over time, check out the historical IRS mileage rates to see the trend.
There is no mileage cap for business deductions or reimbursements.
A common misconception is that there is a maximum number of miles you can reimburse in a single year. The IRS doesn't limit how many miles you can reimburse, as long as:
Whether an account manager drives 2,000 miles or 20,000 miles for work, the 72.5-cent rate applies to every single one of them.
Keep in mind that the IRS doesn't accept estimates or ballpark figures. While the IRS mileage rate is optional for employers, mileage must be properly documented to be deductible.
Here’s what happens if you fail to track the mileage:
If you’re a business owner claiming a tax deduction or an employee seeking a tax-free reimbursement, the IRS requires a detailed log of your driving. This means you must record the:
Without this documentation, the IRS may reject your deductions during an audit. This is why many companies are moving away from manual logs and tracking business mileage on iPhone or Android devices using automated software.
For employers, weak mileage records can raise red flags. Without clear records showing when and where miles were driven, that money becomes taxable income. So instead of getting reimbursed tax-free, you’re now paying taxes on what would have been a simple business expense.
Manual logs often result in "mileage padding" or employees adding extra miles to their work expense reports. A few extra miles here and there adds up fast, and suddenly you're overpaying for trips.
That's where automatic mileage tracking comes in. Tools like Timeero log trips in the background using GPS, so your team doesn't have to remember to write anything down. You get accurate records, and your employees get reimbursed fairly without the admin work.
Overreported miles, missed deductions, increased payroll time, and back-and-forth with employees all come with a cost. Most businesses don’t notice it because it leaks out slowly.
If you're still using paper logs or spreadsheets, now's a good time to rethink that. Automatic mileage tracking saves time, reduces errors, and keeps you audit-ready without the hassle.
See how much you can save when switching to automatic mileage tracking with Timeero's ROI calculator.
Yes, the business mileage rate increased from 70¢ per mile in 2025 to 72.5¢ in 2026. This reflects higher insurance and maintenance costs.
Yes. To claim a tax deduction or receive tax-free reimbursement, the IRS requires a detailed and accurate log of all business miles.
Yes. Employers can choose to pay a lower rate, a flat car allowance, or reimburse actual expenses. However, the IRS rate is the most common benchmark for simplicity and tax benefits.
No, it is an optional standard. Taxpayers always have the choice to track their "actual expenses" (gas, repairs, etc.) instead of using the standard rate, though the standard rate is much simpler to manage.
Judyann is a content specialist with nearly a decade of experience in digital marketing. When she's not building brands and strategies, you'll find her exploring new destinations, embarking on spontaneous adventures, hunting down the best local eats, and spoiling her two fur babies. She believes the best content, like the best trips, comes from curiosity, creativity, and never playing it safe.
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