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Federal Mileage Reimbursement Rate Update for 2026
Jan 1, 2026
Beginning January 1, 2026, the Internal Revenue Service (IRS) has increased the standard mileage reimbursement rate for business travel to 72.5 cents per mile, up from 70 cents per mile in 2025. This rate applies equally to gasoline, electric, and hybrid vehicles.
While private employers are not required to reimburse mileage at the IRS rate, many choose to use it because it provides a simple, widely recognized standard for employee reimbursements. If your business relies on the IRS mileage rate to calculate reimbursements, now is the time to review and update your payroll or expense reimbursement systems to reflect the new amount.
The IRS officially announced the 2026 standard mileage rate on December 29, 2025.
What This Means for Employers
For employers who reimburse employees for business-related mileage, this increase means higher reimbursement costs in 2026. If your company uses the IRS standard mileage rate, it’s important to update payroll, expense reimbursement, and accounting systems to ensure employees are reimbursed accurately starting January 1.
This is also a good opportunity to review your mileage reimbursement policy and confirm it clearly outlines eligible travel, documentation requirements, and reimbursement timing. Keeping policies current and aligned with IRS guidance helps maintain consistency, avoid confusion, and support compliance best practices.
