IRS Sets 2026 Business Mileage Rate at 72.5 Cents

Editor's note: The IRS has since announced a mid-year update to the 2026 business mileage rate. For the most current rate and guidance, please see our updated article, IRS Raises 2026 Business Mileage Rate to 76 Cents, Effective July 1.

If your business reimburses mileage or deducts vehicle expenses, the IRS just made a change you’ll want to account for before year-end planning.

The IRS announced that the standard mileage rate for business use will increase to 72.5 cents per mile in 2026, up 2.5 cents from 2025. While modest, this adjustment reflects higher operating costs and can meaningfully impact reimbursements, deductions, and budgeting for businesses with frequent vehicle use.

The 2026 Standard Mileage Rates at a Glance

Effective January 1, 2026, the optional standard mileage rates are:

• 72.5 cents per mile for business use (up 2.5 cents from 2025).
• 20.5 cents per mile for medical purposes (down 0.5 cents).
• 20.5 cents per mile for qualifying moving expenses for certain active-duty military members and eligible intelligence community employees (down 0.5 cents).
• 14 cents per mile for charitable use (unchanged).

These rates apply equally to gasoline, diesel, hybrid, and fully electric vehicles.

Standard Mileage vs. Actual Expenses: A Reminder

Using the standard mileage rate is optional. You may instead deduct actual vehicle expenses—but there are important rules:

• If you own the vehicle, you must choose the standard mileage rate in the first year it’s available for business use to preserve future flexibility.
• If you lease the vehicle, you must use the standard mileage rate for the entire lease term, including renewals.

Choosing the wrong method at the wrong time can limit deductions later. This is an area where proactive planning matters.

The Bottom Line

Mileage rates are a small line item with an outsized planning impact. The 2026 increase is a good reminder to revisit:

• Your reimbursement policies.
• How owners and key employees track business mileage.
• Whether your current deduction method still makes sense.

At Redpath, we stay ahead of these changes so you don’t have to—and we help you apply them in a way that supports smarter tax outcomes, not just compliance.