2026 IRS Standard Mileage Rate: What Businesses Need to Know

Each year, the IRS announces the standard mileage rate for business use, which provides the tax-free threshold for cents-per-mile (CPM) reimbursements that U.S. employers can offer to employees, in addition to individual tax deductions. Motus cost data and analysis has underpinned the IRS business mileage standard since 1981.¹

In 2026, this rate remains a foundational compliance benchmark. But, equally important is understanding what the rate does not capture: regional variation, different patterns of employee driving, and the diversity of organizational needs. As the mobile workforce continues to grow and evolve, companies must ensure that their reimbursement strategy fits both their operational profile and their employees’ driving behaviors. 

What Changed in 2026 Compared to 2025? 

The IRS announced the 2026 standard mileage rate at 72.5¢ compared with 2025’s 70¢. 

The IRS rate for 2026 reflects year-over-year cost shifts across the U.S. According to Motus data: 

Fuel prices decreased nationally, but at different rates across regions: 

• Midwest: -5.93% 

• Northeast: -6.82% 

• South: -7.16% 

• West: -2.6% 

• Average fuel costs decreased $0.16–$0.25 per gallon, creating some relief for mobile workers. 

• Non-fuel costs, including insurance, maintenance, and depreciation, continued to climb, influencing the total cost of vehicle ownership more than fuel alone. 

These dynamics underscore why a national average rate is helpful for compliance but insufficient for cost accuracy in many organizations. 

Why the IRS Standard Mileage Rate Matters 

1. It Defines the Tax-Free Reimbursement Threshold

The IRS standard mileage rate establishes how much employers may reimburse tax-free. Paying above it triggers documentation demands or taxable income, something that many organizations do not anticipate until audit exposure becomes evident. 

2. It Establishes a Minimum Compliance Baseline

Even when using the IRS standard mileage rate, organizations must substantiate: 

• Accurate mileage logs 

• Date, purpose, and business mileage for every trip 

• Consistent documentation and administrative practices 

Flat allowances, manual logs, and unverified mileage commonly break these rules. 

3. It Addresses Fairness but Only Partially

Although the IRS standard mileage rate typically reflects national cost trends, it cannot accommodate regional volatility, company-specific job patterns, or the broad spectrum of vehicle types that employees use. As a result, the IRS standard mileage rate often becomes a floor, not a reflection of true cost. 

What the Business Mileage Rate Means for Businesses  

1. A timely opportunity to reassess fairness and accuracy 

Because costs change annually and differently by region, organizations benefit from periodically reviewing whether their current approach keeps pace with real expenses. 

2. A reminder that compliance requires more than the rate

Regardless of model, the IRS requires substantiated mileage logs including date, purpose, and distance of each trip. Automated technology dramatically improves accuracy and reduces administrative burdens, which is something that Motus research highlights repeatedly in its benchmark data. 

3. A chance to align programs with workforce needs

Driving employees value: personal vehicle choice, reimbursement fairness, ease of logging mileage, and clarity in program expectations. Selecting the right program type and equipping it with the right technology directly influences employee satisfaction and productivity. 

Understanding Your Reimbursement Options in 2026 

Cents-Per-Mile (CPM) 

Best for: 

• Employees who drive fewer than 5,000 miles annually 

• Seasonal or high-turnover roles 

• Workforces operating in one geographic region where cost variation is minimal
   

Benefits: 

• Simple to administer 

• Ties reimbursement directly to mileage 

• Works well when costs and driving patterns are relatively uniform 

Considerations:

CPM can become less accurate when mileage varies widely among employees or when regional cost disparities matter. 

Fixed and Variable Rate (FAVR) 

Best for: 

• Multi-state or geographically dispersed teams 

• Employees with moderate to high annual mileage 

• Organizations needing more precise alignment between costs and reimbursement 

Benefits: 

• Reflects both fixed ownership costs and variable operating costs 

• Adjusts for geographic cost differences (fuel, insurance, etc.) 

• Provides IRS-compliant tax advantages when properly structured 

Considerations:

FAVR requires more detailed program design but offers higher accuracy for diverse or high-mileage teams. 

How Motus Helps Organizations Navigate the 2026 IRS Standard Mileage Rate 

Motus is the industry’s leading partner for driving employee vehicle program design, IRS-compliant mileage capture, and accurate rate-setting. The Motus platform integrates: 

• IRS-ready substantiation 

• AI-powered mileage classification 

• Compliance and risk controls 

• Location-specific rate modeling 

• Benchmarking grounded in robust business intelligence 

Whether your workforce is best served by using the IRS standard mileage rate or an alternative model like FAVR, Motus provides the tools and expertise to ensure fairness, control costs, and maintain compliance under the 2026 IRS standard mileage rate. 

¹ Motus is the parent entity of Runzheimer International.