IRS Increased the Mileage Rate, Yet You Receive Less Than in 1971 | Carscoops
The Internal Revenue Service has increased the business mileage rate by 2.5 cents per mile.
As of 2026, the IRS has set the business mileage rate at 72.5 cents per mile. The medical mileage rate has slightly decreased, while the charitable mileage rate remains unchanged from 2025. Nonetheless, this new rate is still lower in real terms compared to the original rate established 55 years ago.
If you drive extensively for work, this adjustment from the IRS will benefit you. For 2026, the standard mileage rate for business travel is 72.5 cents per mile, marking a rise of 2.5 cents from the previous year.
This rate applies regardless of whether you drive a hybrid, electric vehicle, diesel, or traditional gas-powered car, providing greater value for every business mile driven when filing your tax return. While the increase may only lead to a few hundred dollars, it could justify investing in a vehicle with a thirstier engine and more cylinders.
The standard mileage rate has been gradually rising over the past few years:
- 58.5 cents per mile — first half of 2022
- 62.5 cents per mile — second half of 2022
- 65.5 cents per mile — 2023
- 67 cents per mile — 2024
- 70 cents per mile — 2025
- 72.5 cents per mile — 2026
Improved, yet not optimal
This mileage rate system has been in place since the early 1970s, introduced by the IRS to simplify deductions for business vehicle use. In 1971, the rate was set at just 10 cents per mile, which appears minimal today, but when adjusted for inflation, it translates to approximately $1.05 per mile in 2026 terms, significantly higher than the current rate.
Interestingly, self-employed individuals in the UK may find the new 72.5 cents per mile rate generous compared to their own. In the UK, businesses and self-employed drivers typically receive 45p per mile for the first 10,000 business miles (16,000 km) and 25p per mile for any additional miles, equating to only 61 and 34 US cents per mile, despite higher fuel costs in the UK, where the national average is about $3 per gallon.
Not all US drivers benefit from the 72.5 cents rate. For medical travel, the mileage rate has decreased to 20.5 cents per mile in 2026, the same rate for relocating active-duty military members, which is down 0.5 cents from last year.
Charitable driving only compensates at 14 cents per mile, unchanged from 2025. This figure is lower than other rates since it does not factor in depreciation or insurance and repair expenses; according to Forbes, it has remained the same since Clinton’s presidency.
Drivers who find these rates insufficient may opt to calculate their actual vehicle costs instead, but this option is available only after the second year of using the vehicle for business purposes. Moreover, if the vehicle is leased, the official rate is mandatory.
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IRS Increased the Mileage Rate, Yet You Receive Less Than in 1971 | Carscoops
The Internal Revenue Service has increased the business mileage rate by 2.5 cents per mile.