WASHINGTON — In a move that could benefit many working drivers, the IRS has announced an increase in the standard mileage rate for business travel. This adjustment could result in higher reimbursement checks for some employees or a reduced tax burden.

The IRS revealed earlier this week that the revised mileage rate is set to take effect starting January 1. However, with this date falling on a federal holiday when many businesses remained closed, most workers will begin experiencing the updated rate as they resume work on Friday.

In 2025, the standard mileage rate for business-related use of a vehicle, including cars, trucks, vans, and other types, was 70 cents per mile. The recent adjustment introduces a 2.5-cent increase, bringing the rate to 72.5 cents per mile.

This change aims to align with the ongoing inflationary trends and applies to the majority of vehicles used for work-related travel, encompassing traditional gasoline and diesel models as well as electric and hybrid vehicles.

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.