On December 26, 2025, the Internal Revenue Service (IRS) announced the 2026 standard mileage rate. The increase began on January 1 and raised the rate from .70 cents per mile to 72.5 cents per mile.
These rates apply to electric and hybrid-electric automobiles, as well as gasoline- and diesel-powered vehicles.
Next Steps for Employers
- Assess Your Reimbursement Policy: The IRS mileage rate is an optional standard used to calculate business-related vehicle expenses in lieu of tracking actual costs. In states where employers are not legally required to reimburse business expenses, including mileage, employers may set any reimbursement rate up to the IRS rate. Regardless of the rate chosen, employers should clearly document the mileage reimbursement amount in their policy and apply it consistently.
- Be Mindful of State Law: Employers should check state-specific laws to determine if they have any additional obligations to reimburse employees for business-related expenses including mileage. Where federal guidelines conflict with state law, employers must follow the requirement that provides the greatest benefits to employees.
