For any business that frequently reimburses employees for work-related travel, the standard business mileage rate is an essential tool. Simply apply it to the number of business miles driven, and you have an efficient, standardized way to calculate reimbursements.
What Is the Standard Business Mileage Rate?
The standard business mileage rate is the amount set by tax authorities, in this case the IRS, to help companies calculate deductible, per-mile costs for business-related driving. This rate is generally updated on an annual basis to reflect fluctuations in gas prices, vehicle depreciation, and maintenance costs.
How the Business Mileage Rate Is Used
The standard business mileage rate is often used by companies when determining how much to reimburse employees for business travel.
The calculation is simple:
Reimbursement amount = Mileage rate x Business miles driven.
This formula ensures employees are compensated — in a simple, objective and consistent way — to help offset the costs of using their personal vehicles for work-related activities, covering everything from fuel to wear and tear.
Current IRS Mileage Rates: 2025
The IRS adjusts the standard business mileage rate each year. Additionally, it provides mileage rates for other types of travel as well. For 2025, these rates are:
• 70 cents per mile for business-related travel. This is the most common type, used when employees drive for work.
• 14 cents per mile for travel done in service of an approved charitable organization.
• 21 cents per mile for medical and moving-related travel, though the Tax Cuts and Jobs Act of 2017 limited moving expenses to active-duty military personnel relocating due to military orders.
These rates give a standardized, easy-to-apply method to use when calculating costs tied to vehicle use, helping streamline travel expense management for employers, employees and others.
Does the Mileage Rate Differ Between Vehicle Types?
As of 2025, the standard business mileage rate applies to any four-wheeled vehicle, including gas-powered, hybrid and electric, designed primarily for use on public roads such as cars, trucks, vans and SUVs. However, it does not cover motorcycles, bicycles, vehicles used directly in the business of transporting persons or property for pay or hire, qualified nonpersonal use trucks and vans or commercial vehicles (over 6,000 pounds unloaded GVWR), which means businesses using alternative forms of transport must use a different approach to calculating travel expenses.
Fixed & Variable Rate (FAVR) vs. Standard Mileage Rate
The Fixed & Variable Rate (FAVR) method for reimbursement is an alternative approach that factors in the cost differences across various geographic locations and vehicle types.
To calculate reimbursements, businesses set vehicle profiles — choosing a specific automobile to represent all vehicles of a similar type — and determine the typical costs of operation for each profile by location. Participating employees are assigned a profile and paid a monthly stipend accordingly, in addition to a per-mile rate that can vary from month-to-month as gas prices fluctuate. This means two employees traveling the same exact distance can receive different reimbursement amounts.
While FAVR can provide a more refined way to reimburse employees for business travel, the research and oversight needed to determine rates and ensure compliance, as well as the IRS requirement that participating employees travel at least 5,000 miles per year, may not be worthwhile for smaller businesses or those with infrequent travel.
How Enterprise and National Can Help
Managing employee travel expenses can be a challenge, especially when juggling the unpredictable costs of mileage reimbursement, vehicle depreciation, and fluctuating fuel prices. The Business Rental Program offered through Enterprise Rent-A-Car and National Car Rental can help simplify this process.
By offering rental vehicles for business travel, you can avoid the added wear and tear on employees’ personal vehicles and, based on an analysis conducted with current Enterprise clients, often save money when compared to reimbursing mileage — particularly for trips over 100 miles.
“On average, our business rental customers pay 55¢ a mile for rentals compared to the IRS standard rate of 70¢. That’s a savings of more than 25%,”1 said Dusty Federko, Assistant Vice President of SMB Development at Enterprise Mobility. “With competitive rates available at locations worldwide, our business rental programs help make travel expenses more affordable.”