The Internal Revenue Service (IRS) recently issued Notice 2026-10, increasing the business standard mileage rate to 72.5 cents per mile, effective January 1, 2026.
Mileage rates are used to calculate the deductible cost of operating vehicles for business, charitable and medical purposes, and apply to electric, hybrid, gasoline or diesel-powered vans, cars, and pickup or panel trucks.
| Rate per mile, effective Jan 1, 2026 | Prior rate per mile | |
| Business use | 72.5 cents | 70 cents |
| Medical purposes | 20.5 cents | 21 cents |
| In service of charitable organizations | 14 cents | 14 cents |
Employers who reimburse employees for business-related mileage when using personal vehicles don’t have to follow the IRS guidelines. However, the rate has long been viewed as a reasonable benchmark. Only three states, California, Illinois and Massachusetts, require employers to reimburse employees for mileage and other business-related expenses. Employee travel expenses that were not reimbursed cannot be deducted at tax time, with the exception of specific educator expenses.
Organizations that allow personal vehicles to be used for business purposes should ensure that all drivers hold proper auto insurance and have a clear motor vehicle record (MVR). If an employee were to get into an accident while operating their vehicle for business use, a personal policy would typically apply as the first coverage, but where limits fall short, a hired and non-owned auto (HNOA) policy can bridge the gap. HNOA policies are secondary to personal auto policies and provide liability coverage for employee-owned vehicles while being used for work-related operations.
If your organization wants to verify your coverage meets the mark, contact a risk advisor at Bukaty Companies Property & Casualty. Our team will provide a comprehensive evaluation of risk and present a strategic plan for fleet safety and management, MVR monitoring and more.
