The Internal Revenue Service (IRS) has announced a standard mileage rate of 72.5 cents for business use, effective January 1, 2026. This rate was calculated using data provided by Motus, a leading provider of vehicle reimbursement, risk mitigation, and productivity solutions for companies with employees who drive for work. Motus has supported the calculation of the IRS standard mileage rate since 1981, drawing on data from a broad pool of drivers across various industries, locations, and company types to analyze national vehicle-expense trends.
The 2026 rate marks an increase from the 2025 rate of 70 cents. Key factors influencing this change include a rise in vehicle acquisition costs and depreciation, as well as increased auto insurance, maintenance, and repair expenses. While fuel prices in 2025 were, on average, 16 cents per gallon lower than in 2024, the escalating costs associated with vehicle ownership and acquisition contributed to the overall rate adjustment.
Phong Nguyen, CEO of Motus, commented on the announcement, stating, “The IRS standard mileage rate increase this year underscores how essential driving for work remains to both operational and financial performance.” He added, “Ensuring fair and accurate reimbursement is more important than ever; it helps organizations meet their budget goals while better supporting the employees who rely on their personal vehicles to get the job done.”
The standard mileage rate for business use establishes the tax-free threshold for cents-per-mile (CPM) reimbursements offered by U.
S. employers and can also be used for individual tax deductions. CPM programs typically suit low-to-mid mileage drivers, reimbursing business mileage in personal vehicles at the IRS standard rate or another fixed rate. For high-mileage drivers, the IRS Fixed and Variable Rate (FAVR) reimbursement method offers a more accurate and equitable solution, allowing companies to tailor reimbursements to specific vehicle types and localize costs based on the employee’s residence.
Motus assists organizations in strengthening their vehicle programs by designing, substantiating, and managing both CPM and FAVR reimbursement models. This approach ensures that payments accurately reflect real driving costs across different markets. Through IRS-compliant rate design, automated mileage capture, and integrated driver-risk controls, Motus provides a comprehensive platform that helps companies transition from outdated programs, reducing waste, mitigating liability exposure, and improving employee satisfaction. By aligning reimbursement strategies with role requirements, geographic specificity, and business objectives, Motus enables fair, predictable, and defensible reimbursement programs that adapt to economic and regulatory changes. Motus is the parent entity of Runzheimer International.
