What vehicle mileage cost means in a bid
A vehicle mileage cost in a bid is the trip miles multiplied by a documented rate, spread across the units they support.
Key takeaways
- Store every mileage rate with its year and its IRS source.
- Tag each mileage line by purpose: business, medical and moving, or charitable.
- Use the business rate for crew trips, never the medical and moving rate.
- Record the business-use share for each vehicle before you assign depreciation.
- Confirm with payroll which valuation rule the company uses for vehicles.
Why mileage belongs in your unit costs
Every estimator who prices a job with a truck in it is carrying vehicle cost somewhere, even if nobody has written it down. Travel to the site, hauling materials, return trips for parts, and service calls all add miles. When your bid software takes a mileage rate, the number you type in becomes part of every unit cost it touches. A rate you cannot trace to a source is hard to defend when a client, a project controller, or your own owner asks how you got it.
At the 2026 business rate of 72.5 cents a mile, every mile you bill carries that rate, so the arithmetic is simple. The hard part is choosing the right rate and knowing what it includes.
The IRS publishes optional standard mileage rates each year. Many firms use their own actual vehicle costs instead, and that can be a sound choice. But the IRS figures give you a documented starting point, and they show which parts of vehicle cost deserve attention when you set up your estimating tools. This post walks through six figures to check, in the order most estimators will meet them.
This is general information for estimators, not tax advice. Check the current IRS pages, and ask your accountant how any figure applies to your company.
1. The 2026 business standard mileage rate
Start with the figure most people look for first. The IRS set the 2026 business standard mileage rate at 72.5 cents a mile, up 2.5 cents. For work you price in 2026, that is the business figure to check against your own vehicle costs.
Keep the year attached to the rate when you store it. A rate that was right for one year's bids can be wrong for the next, and bid software rarely warns you when an old number is still sitting in a unit cost table. Store the rate with its year and the link to its source, so anyone who opens the estimate can see where the figure came from. A simple table with three columns (rate, year, source) is enough for most firms, as the example below shows.
The business rate also comes with a method, and the method matters. The IRS says the rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. In plain terms, the business rate is meant to reflect a fuller cost of running a vehicle than fuel alone. That is why the rate is useful for a bid, and it is also why you should not treat it as the only figure in the file. Figures 2 and 3 show where the rules change.
2. The medical and moving rate
The second figure is a separate rate for medical and moving purposes. The IRS says the rate for medical and moving purposes is based on only the variable costs from the annual study. Compare that with the business rate, which comes from fixed and variable costs. The gap is the lesson. A variable-only rate leaves out costs that stay the same no matter how many miles a vehicle runs, so it should not be used as if it were a full cost of ownership.
The common mistake is to see this rate on the same page as the business rate and apply it to any trip. Use it only for the purpose it covers. A crew truck driving to a job site is business travel, not medical or moving travel, so it belongs on the business rate or on your own actual cost method. If you are unsure whether a trip counts as medical or moving, ask your accountant before you use this figure.
3. The charitable rate
The third figure is the charitable rate, and it works differently from the other two. The IRS notes that the mileage rate for charitable use is set by statute. It does not come out of the annual cost study that drives the business rate. So it is a separate figure with its own source, and your software should keep it separate too.
Estimators meet this when a company donates crew time to a community build, a school project, or a food drive, and wants to record the vehicle cost of getting people there. Record which rate you used and why. If the charitable rate and the business rate both sit in your software, label them clearly so nobody picks one by accident.
Mixed trips are the hard case. A truck might leave the yard for a paid job and stop at a donation site on the way back. The clean answer is to split the miles by purpose and price each part at its own rate. Keep a short note on how you made the split. A rough note that is consistent is better than no note.
The IRS also says that optional standard mileage rates are used to calculate the deductible costs of operating vehicles for business, charitable, and medical purposes. The word "optional" is worth noticing. Standard rates are a choice, not the only method, so your bid policy should say which method your company follows.
4. The fixed-and-variable plan maximum
The fourth figure is the maximum automobile cost used under a fixed-and-variable rate plan. The IRS notice that sets the 2026 figures, Notice 2026-10, contains the optional 2026 standard mileage rates and also the maximum automobile cost used to calculate mileage reimbursement under a fixed-and-variable rate plan.
Most estimators will never set a reimbursement plan. Still, if your company pays staff who drive their own vehicles, some of that cost can end up in a bid, and the cap sets the ceiling on the automobile cost used in that calculation. Ask the finance team which figure they use, and match it. If bid software and payroll use different numbers for the same trip, someone will eventually have to explain the difference, and it is easier to prevent that now.
5. The employer-vehicle valuation limit
The fifth figure is the maximum fair market value of employer-provided automobiles. The notice gives this limit for vehicles first made available to employees in 2026, and it applies where an employer uses either a cents-a-mile valuation rule or the fleet-average valuation rule. You can find it in the IRS release on the 2026 rate, which points to the notice.
Why does this matter for a bid? If your company gives crew trucks to staff for personal use, the value of that personal use is measured under rules like these. How payroll handles the value can flow into labor costs, and labor costs flow into every unit price. Estimators do not set this figure, but they should know it exists and confirm with payroll which valuation rule the company uses before they build a labor rate that includes a vehicle.
6. The 50% business-use line for depreciation
The sixth figure is a share, not a rate. IRS Publication 463 (2025) includes a 2025 MACRS depreciation chart, the chart for the Modified Accelerated Cost Recovery System, and it has separate treatment for vehicles where qualified business use is 50% or less. The publication covers that situation both in the year a vehicle is placed in service and in a later year.
For a bid, this matters if you put a vehicle's depreciation into its cost for each mile driven. Track the business-use percentage for each vehicle, not one company-wide guess. A truck that is mostly on job sites will look very different from a sales car that is mostly personal. When a vehicle's business use is near the 50% line, read the publication before you assign its cost to jobs.
Two cautions. First, the depreciation chart is labeled for 2025, and the page linked here is the 2025 version. Use the chart for the year you are pricing, and check the IRS site for a newer version before you rely on it. Second, depreciation is a tax concept. A bid can use depreciation as a cost input, but your company may use its own estimate of vehicle cost instead.
Illustrative example: turning miles into a unit cost
A unit cost is the cost of one thing you sell or install. Mileage usually enters as a share of a larger job. Suppose a crew drives 250 miles in total to deliver materials and return for a second load, on a job priced by the unit. Multiply the total miles by the mileage rate to get the trip cost, then divide that cost across the units on the job. The result is usually small for each unit, but it adds up across a bid of many units, and it is the kind of line a reviewer will check.
Two checks on the unit cost
Check two things. First, decide how you spread the cost: by unit, by labor hour, or by job total. Pick one and write it down. Second, decide whether the trips belong to this job alone. A shared truck that serves several jobs should split its miles across them, not charge all of them to the first bid that happens to be open.
Who owns each figure
Mileage figures often fall between departments. The estimator needs the rate in the bid. Payroll needs the valuation rule for company vehicles. The accountant needs the depreciation chart and the business-use records. Nobody needs to own all six figures, but each one needs a named owner, and the owner should know which IRS page the number came from. A short ownership list, kept with the rate table, prevents the common situation where a number was right last year, changed, and nobody was told.
If your company does not have a named owner for these figures, ask for one before the next bid cycle. It is a small task, and it protects every estimate that carries vehicle cost. For a wider pre-bid review, see Construction estimate audit: 5 inputs before a bid.
Putting the six figures into your software
Most bid tools have a field for a mileage rate and maybe a field for a mileage type. Here is how to set those up so the figures are easy to check.
- Create one rate table per year. Put the source link beside each rate, so the table documents itself.
- Label every rate by purpose: business, medical and moving, charitable, reimbursement, and valuation. Do not let a single generic mileage field hold all of them.
- Split fixed and variable cost fields where your software allows it. If it does not, write the method in the estimate notes, so the next person can see what the rate includes.
- Use the same standard rate for all vehicle types. The IRS says the rates apply to fully-electric and hybrid automobiles, as well as gasoline and diesel-powered vehicles. Do not create a separate bid rate just for fuel type unless you have your own cost data that supports it.
- Recheck the table when the IRS publishes figures for the next year, and set a calendar reminder for the update so it does not depend on memory.
For other rate fields in the same tools, see Markup and margin rates in 4 estimating tools.
Common mistakes to avoid
Several errors show up again and again in estimating files. The first is using the medical and moving rate for crew trips, which the IRS describes as variable-cost only. Another is carrying an old year's rate into a new bid, which happens when a rate is copied from a past estimate without checking the year. A third is treating the standard rate as the whole cost of the vehicle. The rate reflects the fixed and variable costs in the IRS study, but your own situation may include costs that a standard rate does not capture, such as a vehicle equipped for specific work.
A fourth is assuming electric and hybrid trucks need a separate standard rate. The IRS rates apply to them too. A fifth is forgetting that the standard rate is optional. If your company uses actual costs, write that down, and use the same method across bids so the comparison between jobs holds up.
A checklist before you submit a bid
- The business rate in the bid is the figure for the bid's year, with a source link.
- Each mileage line is tagged by purpose.
- Medical and moving rates appear only on medical or moving trips.
- Charitable trips use the charitable rate, labeled as such.
- Payroll has confirmed the valuation rule used for any company vehicles.
- The business-use share is recorded for each vehicle that feeds a depreciation line.
- The depreciation chart and any other IRS figures match the year of the bid.
- The method note says whether the bid uses standard rates or actual costs.
Where to find the full figures
This post gives you the names of the six figures and the places to find them, but the complete numbers live in the IRS sources. Open the IRS newsroom release on the 2026 business standard mileage rate for the rate and for the link to the notice. Open Publication 463 (2025) for the depreciation chart and the rules on business use. Copy figures from those pages, not from a summary or a forum, and note the date you checked them.
Your next step today
Today, open the IRS release linked above and enter the 2026 business rate in your rate table, with its year and source link.
Frequently asked questions
What is the 2026 business mileage rate?
The IRS set the 2026 business standard mileage rate at 72.5 cents a mile, up 2.5 cents.
Is the medical and moving rate the same as the business rate?
No. The medical and moving rate uses only the variable costs from the annual IRS study, while the business rate uses fixed and variable costs.
Can the standard rate apply to electric and hybrid vehicles?
Yes. The IRS says the rates apply to fully-electric and hybrid automobiles as well as gasoline and diesel-powered vehicles.