The IRS standard mileage rate has risen sharply—reaching 72.5 cents per mile in 2026, nearly 30% higher than in 2021—reflecting increasing vehicle ownership and operating costs rather than fuel prices alone. Key drivers include higher maintenance and repair costs, elevated vehicle acquisition prices due to advanced technology, rising insurance premiums, longer repair cycles, and added complexity from electric vehicles.

While many employers default to the IRS rate, it is not mandatory and represents a national “average of averages,” which often leads to over- or under-reimbursement depending on role, vehicle type, and geography. This mismatch can also expose employers to labor law risk, as compliance issues often stem from wage-and-hour requirements rather than tax rules.

Many fleet programs can operate at a lower cost per mile than the new IRS reimbursement rate. Companies with drivers approaching 1,000 business miles/month should consider providing fleet vehicles as an alternative to per-mile payments. Fleets in 2026 are operating with improved availability, ordering incentives, hybrid fuel technologies, declining interest rates, and strong remarketing values; the case for fleet has never been stronger!