WASHINGTON — The Internal Revenue Service (IRS) has announced an increase in the standard mileage rate for business travel, which could mean larger reimbursement checks for some employees or a reduction in their tax obligations.

Earlier this week, the IRS revealed that the new standard mileage rate would take effect starting January 1st. Since that day was a federal holiday, with many businesses closed, most commuters will begin to notice the updated rate when they resume work on Friday.

For the year 2025, the standard mileage rate for business-related travel in cars, trucks, vans, or other vehicles has been adjusted to 72.5 cents per mile, reflecting a 2.5 cent increase from the previous rate of 70 cents.

This adjustment aims to counter rising inflation and applies to a range of vehicles, including traditional gasoline and diesel models, as well as electric and hybrid cars used for business purposes.

This change comes at a time when fuel prices are on a downward trend. Around this time last year, the average price of a gallon of gas was approximately $3.06. Currently, that average has fallen to about $2.83, as reported by 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.