IRS Sets 2026 Standard Mileage Rate at 72.5 Cents, Citing Rising Vehicle Ownership Costs
The Internal Revenue Service (IRS) has announced the 2026 standard mileage rate for business use at 72.5 cents per mile, an increase from 70 cents in 2025. The new rate will take effect on January 1, 2026.
The mileage rate is calculated using national vehicle expense data provided by Motus, a leader in vehicle reimbursement, risk mitigation, and productivity solutions for organizations with employees who drive for work. Motus has supplied data supporting the IRS mileage rate calculation since 1981, drawing from a broad base of drivers across industries, regions, and company sizes.
The increase in the IRS standard mileage rate reflects how critical work-related driving remains to both operational efficiency and financial performance,” said Phong Nguyen, CEO of Motus. “As costs continue to evolve, fair and accurate reimbursement is essential for supporting employees while helping organizations manage budgets effectively.”
According to Motus analysis, driving costs in 2026 were influenced by several key factors:
- Higher vehicle acquisition costs, with continued increases in purchase prices and depreciation
- Rising ownership expenses, including auto insurance, maintenance, and repairs
- Lower fuel prices, with 2025 average fuel costs approximately 16 cents per gallon lower than in 2024, despite year-long volatility
The IRS standard mileage rate establishes the tax-free reimbursement threshold for cents-per-mile (CPM) programs used by U.S. employers, as well as for individual tax deductions. CPM programs are generally best suited for low- to mid-mileage drivers and reimburse employees at a fixed per-mile rate.
For high-mileage drivers, the IRS Fixed and Variable Rate (FAVR) reimbursement method offers a more precise and equitable alternative. FAVR allows organizations to tailor reimbursements based on vehicle type and local costs of ownership and operation, providing greater accuracy across geographic markets.
Motus supports organizations by designing, substantiating, and managing both CPM and FAVR reimbursement programs. Its platform combines IRS-compliant rate design, automated mileage tracking, and integrated driver-risk controls to ensure reimbursements reflect real-world driving costs. By replacing one-size-fits-all approaches with data-driven, localized solutions, Motus helps companies reduce waste, limit liability exposure, and improve employee satisfaction while remaining compliant amid changing economic conditions.
About Motus
Motus is the industry leader in vehicle reimbursement and risk mitigation solutions for employees who drive. Combining 80 years of expertise with innovative technology, Motus enables organizations to optimize spend and increase productivity across their workforce. With solutions purpose-built to enable data-driven insights and strategic decision making, Motus is the preferred vehicle reimbursement partner to top Fortune 500 companies globally.
