The IRS mileage rate for 2025 stands at 70 cents per mile, up from 67 cents in 2024. Every year, the IRS either raises or lowers the rate, depending on a number of factors.
For businesses reimbursing their mobile employees, predicting next year’s rate can be helpful for accurate budget planning and financial forecasting. If you’re using the rate to deduct your mileage on your taxes, it can also help you understand your bottom line.
While the IRS won’t announce the official 2026 rate until December, historical patterns and economic indicators can provide strong clues about where it’s headed. Let’s examine how the IRS determines these rates and what we can reasonably expect for 2026.
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Our 2026 IRS Mileage Rate Prediction
Looking at recent history can provide the foundation for our prediction.
The mileage rate has climbed from $0.585 in 2022 all the way to $0.655 in 2023, then to $0.67 in 2024, and finally $0.70 in 2025. This is a clear upward trajectory reflecting persistent economic pressures.
Certain factors like the overall decrease in gas prices and certain industry surveys suggesting the costs of owning a vehicle overall decreasing in 2025 may in fact result in a small decrease in the mileage rate.
However, with the Fed’s recent decision to cut the interest rate, an increase in overall insurance costs, and just general evidence of a quiet economy, the rate might increase modestly as well.
With all of that in mind, we predict the 2026 IRS business mileage rate to be somewhere between 69 and 71 cents per mile. Let’s dig into why we came to that range.
How the IRS Sets Mileage Rates
We have discussed this in greater detail before, but in short, the IRS conducts an annual study that analyzes the actual costs of owning and operating a vehicle. This review examines both the fixed costs like insurance and depreciation, plus variable costs like fuel, maintenance, and tires.
They analyze everything from average gas prices to typical repair costs to create a rate that attempts to represent the true costs of driving for business purposes. They don’t just do this alone - they do partner with independent research firms as well.
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The largest component is most likely depreciation, followed by fuel, with things like maintenance, insurance, and registration making up the remainder. Gas prices may grab headlines, but they’re not the whole story.
2022’s rare mid-year adjustment happened because gas prices spiked dramatically, but even with lower gas prices in 2023, the rate increased another three cents because other costs continued to rise.
How Have Vehicle Costs Changed Throughout 2025?
According to the United States Energy Information Administration, national average gas prices have been lower on average in 2025 compared to 2024. The rare mid-year increase that occurred in July of 2022 almost certainly took 2022's historically high gas prices into account.
While gas prices in 2025 have remained relatively high compared to what we saw in the 2010s, the fact that they are lower compared to 2024 could contribute to a smaller increase or even a small decrease in the mileage rate.
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Another significant factor that could affect the 2026 mileage rate is the increased cost of car insurance. The cost of car insurance in 2025 is up 12% compared to 2024, with people in some states like Florida spending nearly $800 more this year.
However, according to AAA’s annual vehicle costs report, the cost of owning and operating a vehicle decreased 5.85% since 2024, the first decrease in several years. 2024 saw a 1% increase from 2023, which saw a 15% increase from 2022.
In addition, a report from AAA found that the average cost of owning and operating a vehicle increased 1% in 2024 compared to 2023 (increasing 15% since 2022).
Other Factors That Might Impact the 2026 Mileage Rate
Generally, the costs of owning a vehicle continue to go up, which may make one think that the standard business mileage rate will increase, but there are other factors to consider.
In some ways, the costs of owning a vehicle continue to go up; in others, they go down. This is part of why we can’t say with absolute certainty that the rate will go up as it has been, or if it will decrease, as we last saw from 2020 to 2021.
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For instance, inflation might be an important factor. The rate of inflation decreased throughout 2018 and 2020, which may be a big contributor to why the standard business mileage rate has decreased in the same time frame.
After peaking in 2022, it saw a major decrease in 2023 and 2024. However, this still coincided with fairly large increases in the IRS mileage rate over those years, so there certainly isn’t a 1:1 correlation there.
Be Prepared for the Change to the Standard Mileage Rate Come 2026
Using a modern company mileage tracking solution like TripLog is the best way for companies to ensure they’re providing accurate reimbursement to their mobile team members and employees.
To learn more about what TripLog's mileage tracker app can do for you and your company, please schedule a complimentary demo, or visit our pricing page to get started!