What a Mile in Your Car Actually Costs

Almost nobody knows what their own driving costs. Fuel is visible because you pay for it at a counter, so it dominates the mental arithmetic, and everything else arrives as an occasional surprise: a set of tyres, a brake job, the insurance renewal, the moment you discover what the car is now worth.

There is a widely used shortcut. Each year the Internal Revenue Service publishes a standard mileage rate for business driving. It is worth understanding both because it is a reasonable benchmark and because it is routinely misread.

Key figures

• $5,331 Example: paid-off car's yearly ownership budget
• 44.4 cents Example: full ownership cost per mile
• 76 cents IRS business mileage rate from July 2026

What the IRS rate is, and what it is not

For 2026 the IRS set the business standard mileage rate at 72.5 cents per mile, up 2.5 cents from 2025. Then it did something unusual: it raised the rate mid-year, to 76 cents per mile for the period from 1 July to 31 December 2026, citing the rising cost of fuel. The medical and moving rate went from 20.5 to 23.5 cents. The charitable rate, which is set by statute rather than by the agency, stayed at 14 cents.

The business rate is built to approximate the full cost of operating a vehicle: fuel, maintenance, repairs, tyres, insurance, registration and depreciation. That makes it a fair yardstick for an average car driven an average amount.

It is not your cost. It is an average across a fleet of vehicles, and yours may be cheaper (an efficient older car you own outright, driven a lot) or dearer (a large truck driven little). If you are deciding whether to take a trip, it also answers the wrong question, because most of what is in the rate does not change when you drive one more mile.

Split the costs in two

The useful division is not by category but by behaviour.

Costs that run on the calendar, whether the car moves or not:

• Depreciation, most of which is time rather than mileage
• Insurance
• Registration, inspection and any state property tax
• Finance charges, if there is a loan

Costs that run on the odometer:

• Fuel or electricity
• Tyres
• Brakes and other wear items
• Oil changes and scheduled servicing
• Some share of larger repairs

When you are deciding whether to keep a second car, the first list is what you save by getting rid of it. When you are deciding whether to drive rather than take the bus, only the second list counts. Using one where the other belongs is the most common mistake in this arithmetic, and it usually favours driving.

Work out your own number

1. Fuel. Divide the current pump price by your rated combined mpg. At the EIA’s national average of $4.319 a gallon for regular in mid-September 2026, a 28 mpg car costs 15.4 cents a mile; a 40 mpg car costs 10.8 cents.
2. Tyres. Price of a set fitted, divided by the treadwear mileage you actually get. A $900 set lasting 45,000 miles is 2 cents a mile.
3. Servicing. Add a year of scheduled work and divide by your annual mileage.
4. Repairs. Take the last three years of repair bills and divide by the miles driven in those years. This is the number people leave out, and on an older car it can be the second largest line.
5. Depreciation. What the car was worth a year ago, minus what it is worth now. On a newer car this will be larger than everything else put together.
6. Fixed costs. Insurance plus registration plus finance, divided by annual mileage if you want a single per-mile figure. Keep it separate if you are deciding about individual trips.

Where the IRS rate goes wrong for old cars

Depreciation dominates the standard rate, and a car that has already lost most of its value cannot lose it again. A twelve-year-old car in sound condition may depreciate a few hundred dollars a year, so its true cost per mile can sit well below the federal rate even when repair bills are climbing.

That is the quiet argument for keeping a car that runs. The repairs are visible and the depreciation you are no longer paying is invisible, so the decision feels worse than it is. Running the two lists above is how you make the invisible half show up.

A worked example

Take a paid-off car at 28 mpg, driven 12,000 miles a year:

• Fuel at $4.319 a gallon$1,851
• Insurance$1,400
• Registration and inspection$180
• Servicing and repairs$900
• Tyres$300
• Depreciation$700

Worked example in this article: paid-off car at the stated fuel economy and annual mileage. EIA supplies the gasoline input; other budget lines are illustrative.

Under the federal rate for the second half of 2026, the same 12,000 miles would be reimbursed at $9,120. The gap between those two numbers is the point: an older, paid-off car is usually far cheaper to run than the standard rate assumes, and a new one is often dearer.

The ownership budget distinguishes the cash payment schedule from economic costs. The depreciation guide explains the resale loss that a fuel-only mileage calculation misses. Add parking charges and toll transponder costs when the vehicle and route incur them.

Questions people ask

What is the IRS mileage rate for 2026?

72.5 cents per mile for business use from 1 January to 30 June 2026, and 76 cents per mile from 1 July to 31 December after a mid-year increase. Medical and military moving use went from 20.5 to 23.5 cents; the charitable rate stayed at 14 cents.

Does the IRS mileage rate include depreciation?

Yes. The business rate is built to cover the full cost of operating a vehicle, including fuel, maintenance, repairs, tyres, insurance and depreciation. That is why it is much higher than fuel cost alone.

What does it really cost to drive a mile?

It depends mainly on the car's value and your annual mileage. A paid-off, efficient car driven 12,000 miles a year can come in around 40 to 50 cents a mile all in, while a new vehicle driven little can exceed a dollar. Fuel is often only a third of the total.

Should I use cost per mile to decide on a trip?

No. For a single trip, only the costs that change with distance count: fuel, tyres, wear and some share of repairs. Insurance, registration and most depreciation happen whether you take the trip or not.

Where these figures come from

1. Standard mileage rates Internal Revenue Service · irs.gov
2. IRS sets 2026 business standard mileage rate at 72.5 cents per mile Internal Revenue Service · irs.gov
3. Weekly Retail Gasoline and Diesel Prices US Energy Information Administration · eia.gov
4. Find and Compare Cars US Department of Energy and EPA, fueleconomy.gov · fueleconomy.gov

Figures last checked September 2026.