How to Calculate Mileage Pay: 2026 IRS Rates and Rules

To calculate mileage pay, multiply your qualifying business miles by the applicable IRS rate. For 2026, the business rate is 72.5 cents per mile, so 1,000 business miles produces $725.¹ The arithmetic is easy. What determines whether your number is right, and whether the money stays tax-free, is which miles you count and how you document them.

The 2026 Rates

Pick the rate that matches the purpose of the driving. For miles driven on or after January 1, 2026:²

Business use: 72.5 cents per mile
Medical care and qualifying military moves: 20.5 cents per mile
Charitable volunteering: 14 cents per mile

The business and medical rates are recalculated each year from a study of fixed and variable vehicle costs. The charitable rate is fixed in federal statute at 14 cents and does not move.³ The rates apply the same way to gasoline, diesel, hybrid, and fully electric vehicles; there is no separate figure for EVs.¹

One number inside the business rate matters later: 35 cents of the 72.5 cents is treated as depreciation. If you eventually sell or trade the vehicle, the IRS expects you to reduce its tax basis by the depreciation portion of every mile you claimed.²

Which Miles Count as Business Miles

The line between deductible business travel and nondeductible commuting is where most calculations go wrong.

Commuting Does Not Count

Driving from your home to your regular workplace and back is commuting. It is not reimbursable business travel under IRS rules, no matter how far you live from the office.⁴

Miles that do count include travel between two work locations on the same day, trips from your regular office to a client site, and travel to a temporary work location.

Temporary Work Locations

A work assignment realistically expected to last one year or less is temporary, and driving to it is deductible even when it is closer than your usual commute. The test is your expectation at the outset. If you expect the assignment to last more than a year, the IRS treats it as indefinite and the travel is nondeductible commuting from day one.⁴ If a nine-month project is later extended past a year, travel becomes nondeductible when you learn of the extension, not retroactively.

The Home Office Exception

If your home office qualifies as your principal place of business, the commuting rule flips. Trips from that home office to a client, job site, or second office are deductible business travel.⁴ Without a qualifying home office, the first trip of the day from home to a work location is commuting.

Log Each Trip as You Go

Build your mileage total from a log created at or near the time of each trip. Reconstructing a year of driving from memory in April invites errors and gives an auditor grounds to disallow the whole deduction.⁴ Each entry needs four pieces of information:

The date of the trip.
The destination, identifiable by city, client name, or address.
The business purpose, briefly noted (client meeting, site inspection, delivery).
The distance, either from odometer readings or total miles driven.

GPS-based tracking apps capture most of this automatically. The IRS does not mandate any particular format or software; digital records must meet the same standard as paper logs, showing amount, date, destination, and business purpose for each expense.⁵

Running the Numbers

Total qualifying miles multiplied by the per-mile rate equals your reimbursement. A salesperson who logged 4,200 business miles in the first quarter of 2026 calculates:

4,200 × $0.725 = $3,045.00

When trips fall into different categories in the same period, separate them into distinct line items and apply each rate on its own. If the same person also drove 300 miles for charitable volunteer work, that portion is:

300 × $0.14 = $42.00

Combining business, medical, and charitable miles into a single total is a common error that triggers questions from reviewers. Keep the categories apart on the form.

Most expense software has fields for miles and the applicable rate and runs the multiplication for you. On a paper form, check the arithmetic before submitting; accounting departments routinely bounce requests over small math errors, delaying payment by a pay cycle.

Whether the Money Is Taxable

Calculating the gross figure is half the picture. Whether you keep all of it depends on whether your employer’s arrangement is an “accountable plan” under IRS rules.

An accountable plan must meet three conditions:⁴

Business connection. The expenses relate directly to your work duties.
Adequate accounting. You substantiate each expense to your employer with dates, amounts, destinations, and business purposes within 60 days.
Return of excess. You return any reimbursement above your documented expenses within 120 days.

When all three are met, the reimbursement is not taxable income and does not appear in Box 1 of your W-2. If the plan fails any test, or if you personally miss the 60-day substantiation window or fail to return an excess, the full amount is added to your wages and taxed like ordinary income and payroll.⁴ Submitting your log on time is what protects the tax treatment.

If You Are Self-Employed

There is no employer to reimburse you. Instead, you deduct business mileage on Schedule C. The 72.5-cent rate and the same recordkeeping rules apply.² The deduction reduces both income tax and self-employment tax, so each mile carries more tax value than the rate alone suggests. Rideshare drivers, freelance consultants, real estate agents, and delivery contractors typically calculate mileage this way, and a qualifying home office again converts the first trip of the day from nondeductible commuting into deductible business travel.⁴

W-2 employees are in a different position. The Tax Cuts and Jobs Act suspended the deduction for unreimbursed employee expenses beginning in 2018. That suspension was set to expire after 2025, and whether it has been extended is worth confirming with current IRS guidance or a tax professional before assuming you can deduct unreimbursed mileage. If your employer simply does not reimburse and you are a W-2 employee, you may have no federal tax remedy.

Reimbursement Is Not Federally Required

Federal law does not require employers to reimburse mileage at all. If business driving pushes your effective pay below the federal minimum wage, wage and hour rules may apply, but no general federal mandate obliges an employer to pay you back for using your personal car.

California, Illinois, and Massachusetts have laws requiring employers to reimburse necessary business expenses, mileage included. If you work in one of those states and your employer refuses to reimburse qualifying travel, you may have a legal claim. Other states have narrower rules or none. Check your state labor department for the requirements that apply where you work.

1
Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile, Up 2.5 Cents
2
Internal Revenue Service. Notice 2026-10 – 2026 Standard Mileage Rates
3
Office of the Law Revision Counsel. 26 U.S. Code 170 – Charitable, Etc., Contributions and Gifts
4
Internal Revenue Service. Publication 463 (2025), Travel, Gift, and Car Expenses
5
Internal Revenue Service. What Kind of Records Should I Keep