On December 29, 2025, the Internal Revenue Service (IRS) released the 2026 optional standard mileage rates, which are used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. For 2026, the business use rate will increase 2.5 cents, while the rates for medical and moving purposes will decrease slightly.
This means that beginning January 1, 2026, the standard mileage rates for the use of a car, van, pickup or panel truck are:
- 72.5 cents per mile driven for business use, up 2.5 cents from 2025.
- 20.5 cents per mile driven for medical purposes, down a half cent from last year.
- 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 2025.
- 14 cents per mile driven in service of charitable organizations, unchanged from last year.
These rates apply to all vehicles, including fully electric and hybrid automobiles, as well as gasoline- and diesel-powered vehicles.
The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil. The rates for medical and moving purposes are based on variable costs only, while the charitable rate is set by statute.
Remember that California employers must fully reimburse employees for all expenses actually and necessarily incurred. The California Division of Labor Standards Enforcement (DLSE) has stated that using the IRS mileage rate will generally satisfy an employer’s obligation to reimburse for business-related vehicle expenses, absent evidence to the contrary. Employees, however, always have the option of calculating the actual costs of using their vehicle instead of the standard mileage rate.
Now that the new year is here, employers should ensure their expense reimbursement policies are updated to reflect the new 2026 rates, particularly the higher business mileage rate.
Talia DeMello, Editor, CalChamber
CalChamber members can read more about Expense Reimbursements in the HR Library. Not a member? See how HRCalifornia can help you.
