The Internal Revenue Service (IRS) has released the 2026 standard mileage rate for business use of 72.5 cents. This rate is calculated using data from Motus, a leader in vehicle reimbursement, risk mitigation and productivity solutions for companies whose employees drive for work.1 With data from a broad pool of drivers across diverse industries, locations, and company types, Motus captures and analyzes national vehicle-expense trends, providing data that has underpinned the IRS standard mileage rate since 1981.
The 2026 IRS standard mileage rate increased to 72.5 cents from the 2025 rate of 70 cents and will go into effect January 1, 2026.
Driving costs have changed in 2026 due to some key factors and trends, including:
- Increased cost to buy a car: vehicle acquisition costs continue to rise, and depreciation has also increased.
- Increased cost to own a car: auto insurance, maintenance, and repair costs all increased year-over-year.
- Decreases in fuel prices: although fuel prices have fluctuated throughout the year, overall fuel prices in 2025 have been lower than in 2024, with a difference of 16 cents per gallon on average.
“The IRS standard mileage rate increase this year underscores how essential driving for work remains to both operational and financial performance,” said Phong Nguyen, CEO of Motus. “Ensuring fair and accurate reimbursement is more important than ever; it helps organizations meet their budget goals while better supporting the employees who rely on their personal vehicles to get the job done.”
The standard mileage rate for business use provides the tax-free threshold for cents-per-mile (CPM) reimbursements that U.S. employers can offer to employees, in addition to individual tax deductions. A CPM program is best suited for low-to-mid mileage drivers and uses the IRS standard mileage rate or another fixed rate to reimburse for business mileage in personal vehicles.
For high-mileage drivers, the IRS Fixed and Variable Rate (FAVR) reimbursement method is a more accurate and equitable solution. FAVR enables companies to tailor reimbursements to the type of vehicle the role requires and localize the costs of owning and operating a vehicle to where the employee lives. Together, FAVR and CPM programs enable companies to provide fair, tax compliant reimbursement strategies that address the needs of every driver, regardless of their annual business mileage.
Motus strengthens organizations’ vehicle programs by designing, substantiating and managing both CPM and the more flexible and tailored FAVR reimbursement models, which ensure that payments accurately reflect real driving costs in every market. Instead of relying on one-size-fits-all approaches, Motus equips companies with IRS-compliant rate design, automated mileage capture and integrated driver-risk controls in a single, comprehensive platform. These capabilities help organizations transition away from outdated programs that create waste, liability exposure and employee dissatisfaction. By aligning reimbursement strategy with role requirements, geographic specificity and business objectives, Motus enables companies to deliver fair, predictable and defensible reimbursement programs that adapt to economic and regulatory changes.
1 – Motus is the parent entity of Runzheimer International.
