The Internal Revenue Service recently increased the optional standard mileage rate for business travel to 76 cents per mile.
The rate increased from 72.5 cents per mile and applies to eligible business mileage beginning July 1, 2026. Although the change was announced on July 13, 2026, it applies retroactively to mileage incurred on or after July 1.
The rate applies to electric, hybrid-electric, gasoline-powered, and diesel-powered vehicles.
What Employers Need to Know
The IRS mileage rate is an optional standard that private employers commonly use to reimburse employees who operate their personal vehicles for business purposes.
Employers are not automatically required under federal law to reimburse employees at the IRS rate. However, certain states require employers to reimburse employees for necessary business expenses, which may include mileage.
Review applicable state law before establishing a reimbursement rate. A reimbursement practice should not result in an employee’s wages falling below an applicable minimum wage or unlawfully shift required business expenses to the employee.
Employees should continue to document the date, destination, business purpose, and number of miles associated with each trip.
Next Steps for Employers
Employers using the IRS mileage rate should update payroll, accounting, and expense management systems to apply the 76-cent rate to qualifying mileage incurred on or after July 1, 2026. They should also review any expenses already submitted for mileage after that date to determine whether an additional reimbursement is needed. Employers should communicate the updated rate to employees, confirm whether their reimbursement policy automatically follows the IRS rate or uses a fixed amount, and review applicable state expense reimbursement requirements.
