IRS' 2026 Mileage Rate: 72.5 Cents Per Mile and What It Means
The federal mileage rate for 2026 just hit a record: 72.5 cents per mile. The IRS announced the 2.5-cent jump on December 29, 2025, and it kicks in January 1. That rate matters whether you're a W-2 employee driving your personal truck to job sites, a gig worker tracking miles for tax deductions, or a federal employee submitting a travel voucher. This number quietly governs reimbursements—and arguments—with employers across the country.
The new standard rate covers fuel, insurance, depreciation, maintenance, tires, registration—the full cost of putting your car to work. The IRS calculates it annually using real-world data on what it costs to own and operate a vehicle, then publishes the number as a safe-harbor standard. Employers use it to decide reimbursements. Freelancers and contractors use it to calculate deductions. The rate applies to gas, diesel, hybrid, and fully electric vehicles—no different math for your EV.
Drive 100 miles a week for work and you're racking up 400 miles a month. At 72.5 cents per mile, that's $290 a month your car is costing you in business use. Over a year, 4,800 miles comes to $3,480. If your employer reimburses you at last year's rate of 70 cents instead of the new 2026 rate, you're eating $120 a year out of pocket. That gap widens fast if you're logging serious mileage.
What the New Mileage Rate Covers (and Who Uses It)
The 72.5-cent rate is specifically for business driving—sales calls, job-site visits, client meetings, deliveries. Medical and moving mileage for active-duty military and certain intelligence personnel dropped to 20.5 cents per mile. Charitable driving stayed at 14 cents, set by statute and unchanged for years.
Who uses this rate? Employees who drive their own vehicles for company business and get reimbursed per mile. Self-employed people and contractors who deduct vehicle expenses on their taxes. Federal workers submitting travel claims. The rate sets the baseline for "reasonable" reimbursement, and many companies adopt it because it's defensible, transparent, and updated annually.
If you're not tracking miles, you're leaving money on the table. Apps, odometer photos, paper logs—pick one system and stick with it. The IRS wants dates, destinations, business purpose, and miles driven. Your employer wants backup for reimbursement requests. No log, no money.
My Verdict
If your company reimburses mileage, confirm they updated their policy for 2026. Some lag behind or round down to save costs. If you're negotiating reimbursement terms, the federal rate is your anchor—it's public, defensible, and based on real costs. If you're self-employed, track every business mile religiously. At 72.5 cents, even short trips add up fast. The rate's climbing because cars cost more to own and operate than ever, and if you're not capturing that, you're subsidizing your work with your wallet.