IRS Raises ‘General Business Use’ Mileage Reimbursement Rate for 2026

Many employers require that certain employees use their personal vehicles for business usage, and reimburse them on a per-mile basis, with the compensable rates reflecting U.S. Internal Revenue Service (IRS) guidance and/or state government statutes.

To help organizations with their reimbursement policies and practices, the IRS on Monday, Dec. 29, set the 2026 optional standard mileage reimbursement rate for general business vehicle use at 72.5 cents per mile, an increase of 2.5 cents over the 2025 rate. The agency also adjusted the rates for certain medical, moving and “in-service” mileage reimbursement scenarios.

The standard mileage rates, which took effect Jan. 1, apply for the use of a car, van, pickup or panel truck, and are the same whether the employee uses a gasoline- or diesel-powered vehicle or one that is fully electric or a gas-and-electric hybrid.

The 2026 standard mileage rates are as follows:

As a reminder, there is no federal law in the U.S. requiring employers to reimburse their employees for mileage when using a personal vehicle for work. The key federal legal requirement is ensuring all work expenses, including mileage, do not reduce an employee’s effective wage below the federal minimum wage of $7.25 per hour.

Note, however, that a few states (e.g., California, Illinois, Massachusetts) do have laws mandating that certain employers reimburse their employees for all necessary work-related expenses, which includes using a personal vehicle for business purposes.

Regardless of the presence of state laws, employers can use the IRS standard mileage rate as a benchmark for tax-free reimbursement. In this application, employers can reimburse employees up to the standard mileage rate without the reimbursement being considered taxable income for the employee. In addition, self-employed individuals can use the rate to calculate the deductible costs of operating a vehicle for business purposes on their federal tax returns.

Check out IRS Notice-2026-10 for additional information and tax ramifications.

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