IRS mileage rate 2026: 72.5 cents, then 76 cents from July 1

The IRS mileage rate 2026 for business use is 72.5 cents a mile for miles driven January 1 through June 30 and 76 cents a mile for miles driven July 1 through December 31. The IRS set the first figure in Notice 2026-10 on December 29, 2025, then raised it in Announcement 2026-11, published July 13, 2026, because of fuel prices. That makes 2026 the second split year since 2022, and it means any mileage claim you pay for 2026 has to be matched to the date of the trip, not just the year. This guide gives the current standard mileage rate 2026, the full history, a calculator, the rules that keep reimbursements tax-free, and a mileage log template your team can copy today.

The 2026 IRS standard mileage rates

The standard mileage rates are optional per-mile figures the IRS publishes each year. Self-employed people use them to deduct vehicle costs, and employers use them as the benchmark for tax-free mileage reimbursement. Three rates exist, and they apply to electric, hybrid, gasoline and diesel vehicles alike.

Three details from Notice 2026-10 matter to employers and self-employed drivers:

• Depreciation share. Of the business rate, 35 cents a mile is treated as depreciation in 2026 (up from 33 cents in 2025). Business owners who use the standard rate reduce the car's basis by that amount for every business mile.
• FAVR cap. For fixed and variable rate plans, the standard automobile cost may not exceed $61,700 in 2026, for cars, trucks and vans.
• Employees cannot deduct mileage themselves. The One Big Beautiful Bill Act made permanent the disallowance of unreimbursed employee business expenses as itemized deductions, so a W-2 employee who drives for work and is not reimbursed gets no tax relief, with narrow exceptions for Armed Forces reservists, fee-basis state and local officials and certain performing artists. If you want your employees made whole, the reimbursement has to come from you.

Announcement 2026-11 says the higher rates apply to expenses paid or incurred on or after July 1, 2026, and to mileage allowances paid to an employee on or after that date for driving done on or after that date. All other parts of Notice 2026-10, including the depreciation and FAVR figures, stayed in effect.

Mileage reimbursement calculator

Enter the miles for one trip and how many trips a month, pick the rate, and add parking or tolls if you reimburse them separately. The default is a Northfield Coffee example: Sam Rivera drives pastry trays from the Roastery to the South Congress café, an 18-mile round trip, about 12 times a month.

The math is simple: miles × rate = reimbursement. Parking and tolls are not inside the standard mileage rate, so you can reimburse them on top, with receipts. What trips people up is the split year. An employee who drove 1,000 business miles in 2026, half before July 1 and half after, is owed 500 × $0.725 + 500 × $0.76 = $362.50 + $380.00 = $742.50. Paying all 1,000 at 76 cents ($760.00) would be $17.50 too much, and the excess is taxable wages. Paying all at 72.5 cents ($725.00) shortchanges the employee by $17.50 and, in California or Illinois, could fall short of the state duty to reimburse.

Will there be an IRS mileage rate 2027? Not announced yet

As of November 12, 2026, the IRS has not published the 2027 standard mileage rates, so the IRS mileage rate 2026 of 76 cents is the figure to use for every trip through December 31. Its standard mileage rates page lists 2026 as the latest year, and nothing in the newsroom mentions 2027 mileage. Any site that quotes an IRS mileage rate 2027 right now is guessing.

The timing is predictable, though. Recent annual notices came out on December 29, 2022 (for 2023), December 14, 2023 (for 2024), December 19, 2024 (for 2025) and December 29, 2025 (for 2026). Expect the 2027 notice in the second half of December 2026, effective January 1, 2027.

How the number is set, per Notice 2026-10: an independent contractor runs an annual study for the IRS of the fixed and variable costs of operating a car. Fuel, maintenance, tires, insurance, registration and depreciation all feed the business rate. The medical and moving rate uses only the variable costs from the same study, which is why it is so much lower. The charitable rate is written into the tax code at 14 cents and only Congress can change it. Mid-year adjustments like the ones in 2022 and 2026 happen when fuel prices move sharply; they are the exception, not the rule.

What to do now: keep paying 76 cents for trips through December 31, 2026, write your mileage policy so it says "the current IRS standard business mileage rate" rather than a fixed number, and put a reminder in your payroll calendar for the week of December 15 to check irs.gov and update the rate in your expense settings for January 1 trips.

IRS mileage rate history, 2022 to 2026

Every figure below, including the IRS mileage rate 2026, is taken from the IRS standard mileage rates page and the news release or bulletin cited. Note the two split years.

The business rate has risen 17.5 cents, or about 30%, since the start of 2022. The medical rate has bounced around because it tracks only variable costs, mostly fuel. Keep this table handy when an employee submits an old claim: a 2025 trip submitted in 2026 is reimbursed at the 2025 rate of 70 cents.

How employee mileage reimbursement works

Is it required?

Federal law does not require employers to reimburse mileage in general. Under the FLSA's "free and clear" rule (29 CFR 531.35), the problem arises only if an employee's unreimbursed costs for tools the job requires, including driving a personal car for work, cut into the minimum wage or overtime owed for the week. That is most likely for lower-paid hourly staff who drive a lot, such as delivery drivers and home care aides.

Some states require more:

• California. Labor Code section 2802 requires employers to indemnify employees for all necessary expenditures or losses incurred in direct consequence of their job duties. Business driving in a personal car is a textbook example. The IRS rate is the most common way California employers meet the duty; the California Supreme Court in Gattuso v. Harte-Hanks Shoppers (2007) held that the law does not dictate the method as long as the employee is fully reimbursed, so an employee whose actual costs run higher than the per-mile amount can ask for the difference.
• Illinois. Section 9.5 of the Illinois Wage Payment and Collection Act requires reimbursement of necessary expenditures that are required for the job and primarily benefit the employer, when the employer authorized or required them. Employers may set written guidelines and limits, but a policy cannot provide for no or only trivial reimbursement. Employees generally submit expenses within 30 days.
• Other states and cities. A handful of others have their own reimbursement laws, some limited to travel during the workday. Check your state labor department.

Even where it is optional, most employers that ask staff to drive pay the IRS rate. It is the figure employees expect, it is defensible, and it is the ceiling for tax-free payment. Our hybrid work schedule guide covers the same California and Illinois rules for home office costs.

The accountable plan rules that keep it tax-free

Whether a mileage payment is taxable depends on how you pay it, not on what you call it. According to IRS Publication 15, amounts paid under an accountable plan are not wages and are not subject to income tax withholding, Social Security, Medicare or FUTA. To be an accountable plan, your arrangement must require employees to meet all three of these rules:

1. Business connection. The miles were driven for your business while the employee was working for you.
2. Substantiation within a reasonable period. The employee gives you a record of each trip: date, destination, business purpose and miles. The IRS generally treats 60 days after the expense as reasonable.
3. Return of any excess within a reasonable period. If you advance money and the employee drives fewer miles than expected, they pay back the difference, generally within 120 days.

Mileage has a shortcut built in. Publication 15 and Publication 463 say a mileage allowance paid at or below the federal standard mileage rate is treated as substantiated as to amount; the employee only has to prove the time, place and purpose of the trips, not the gas and insurance behind them. Pay more than the IRS rate and the excess is wages: it goes through withholding and payroll taxes and lands in box 1 of the W-2, while the tax-free portion is reported in box 12 with code L.

Two arrangements fail the test. A flat monthly car allowance paid with no mileage record is a nonaccountable plan, so the whole payment is taxable wages, even if the employee really did drive. And a reimbursement at the IRS rate for trips nobody logged is in the same position. On a pay stub, an accountable-plan reimbursement shows as its own line outside taxable wages; our guide on how to read a pay stub shows how Emily Carter's $86.00 reimbursement stays out of her taxable gross. Payroll then processes the reimbursement with the paycheck but leaves it out of the tax calculations.

What a mileage reimbursement policy should say

• Who is eligible and which trips count (see commuting, below).
• The rate: "the IRS standard business mileage rate in effect on the date of the trip."
• What must be logged for each trip and the deadline to submit (30 days is common; 60 is the IRS safe harbor; Illinois employees generally get at least 30).
• Whether parking and tolls are reimbursed, and that receipts are required for them.
• That the employee must hold a valid license and insurance, and that reimbursement is paid through payroll on the next regular payday.

Commuting vs business miles

The IRS draws a hard line in Publication 463: travel between home and a regular workplace is commuting, a personal expense, no matter how far it is or whether the employee makes work calls on the way. Reimbursing commuting miles is allowed, but the payment is taxable wages. Business miles start once the workday does.

The exceptions the IRS spells out: trips between two workplaces in the same day, trips from home to a temporary work location, and trips from a home office that qualifies as the employee's principal place of business to another work site. Minor personal stops, such as lunch between two business stops, do not break a business trip. A common error is paying the first and last leg of a field employee's day; if they report to the same yard or store every morning, that leg is commuting.

Location data from a time clock helps settle disputes about where someone was, but it is not a mileage log. Workzenly's GPS time tracking records location at clock-in and clock-out, not the route in between, so it confirms an employee started the day at the South Congress café; the miles still come from the log. Our guide to GPS time clock apps explains what that location record does and does not show.

Mileage log requirements and a template to copy

IRS Publication 463, Table 5-1, lists what a record of car expenses must show: the date of each trip, the destination, the business purpose, and the miles for each business use plus total miles for the year. The record has to be made at or near the time of the trip, in an account book, diary, log, trip sheet, app or similar record; the IRS does not accept estimates or reconstructions months later. Receipts are not needed for expenses under $75, but parking and toll receipts are the easy way to support those amounts. Keep logs for at least three years from the date the related return is filed; for an employer, that means with the payroll records for the year the reimbursement was paid.

Odometer readings are not required by the IRS, but they make a log hard to argue with. The template below works on paper, in a spreadsheet or pasted into a note; the sample rows show how Northfield Coffee fills it in.

The three sample rows total 43 miles, which at 76 cents is $32.68, plus $6.00 parking, for $38.68. One habit makes the whole thing work: log the trip the same day. A monthly log filled in from memory on the 30th is exactly what the IRS means by an estimate. If your team submits expenses in the employee app, make mileage its own category with these fields required, so a claim cannot be sent without a date, destination, purpose and miles.

FAVR and actual-expense alternatives

The cents-per-mile method is not the only way to reimburse driving tax-free. Two others are worth knowing about, briefly.

Fixed and variable rate (FAVR) allowances

A FAVR plan pays each driver a fixed monthly amount for the costs of owning a car (depreciation, insurance, registration) plus a variable per-mile amount for operating costs (fuel, maintenance, tires), both based on the costs in the employee's area. Payments under a plan that follows the rules in Revenue Procedure 2019-46 are treated as substantiated, so they are not wages. The plan has to be built on a standard automobile cost of no more than $61,700 in 2026, and it comes with detailed eligibility and recordkeeping conditions, so it suits companies with a group of high-mileage drivers, not a café with one supply run a week.

Actual expenses

Instead of a per-mile rate, the employee (or a self-employed owner) tracks every car cost for the year, such as gas, oil, repairs, tires, insurance, registration, lease payments or depreciation, and multiplies the total by the business-use percentage from the mileage log. The log is still required; it is what produces the percentage. For an employer, reimbursing actual substantiated costs also qualifies under an accountable plan, but it means collecting receipts for everything, which is why almost everyone with a few drivers uses the IRS rate instead.

Two limits on the standard rate for business owners: it must be chosen in the first year the car is used for business, and it cannot be used if five or more cars are operated at the same time, as in a fleet. Contractors handle all of this on their own returns; if someone driving for you is paid on a 1099, mileage is their deduction, not your reimbursement, and our 1099 vs W-2 guide explains why that classification has to be right before the mileage question even comes up.

Frequently asked questions