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If you drive your car for work, you may get a bigger reimbursement check or a tax break this year.
WASHINGTON — The IRS is increasing the standard mileage rate for commuters driving on business, meaning some employees could see an increase in their reimbursement checks this year or a lower tax bill.
The IRS announced at the beginning of the week that the new standard mileage rate would start on Jan. 1. Because that was a federal holiday and many businesses were closed, most working drivers will start seeing the new rate Friday when they return to work.
In 2025, the standard mileage rate for business use of a car, truck, van or other vehicle was 70 cents. But a 2.5 cent increase raises that number to 72.5 cents per mile.
The change is being made to keep up with rising inflation, and applies to most vehicles when driven for work purposes, including traditional gas and diesel-powered cars, electric vehicles and hybrids.
The increase comes at a time when gas prices are trending downward. Last year at this time, a gallon of gas cost about $3.06. Right now, the average is about $2.83, according to AAA.
Do employers have to use the standard rate?
The standard mileage rate is optional, but suggested by the federal government. Many employers who give reimbursement per mile, such as restaurants with delivery drivers, use the standard rate to determine what to compensate their drivers for using their own car.
But for employees who don’t get a per-mile reimbursement, there’s still a way to get cash back from using a personal car for work. When filing taxes, employees can estimate how much they drove for work, applying the standard mileage rate to potentially get some money back.
People who use their car for work don’t have to use the standard rate though. They may instead calculate the actual costs of using their vehicle when it comes time for tax season.
The rates for some related activities have also changed in the new year, according to the IRS.
- 20.5 cents per mile driven for medical purposes, down a half cent from 2025.
- 20.5 cents per mile driven for moving purposes for certain active-duty members of the Armed Forces (and now certain members of the intelligence community), reduced by a half cent from last year.
- 14 cents per mile driven in service of charitable organizations, equal to the rate in 2025.
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