Company Car Personal Use Tax Calculator

How the calculation works

1. 1

   Enter personal miles

   Enter the number of personal (non-business) miles driven in the employer-provided vehicle during the year.

2. 2

   Apply the mileage rate

   The taxable value is the IRS standard mileage rate (76 cents/mile, effective July 1, 2026) multiplied by personal miles.

3. 3

   Choose your tax bracket

   Choose your marginal federal tax bracket to see the estimated income tax on the taxable value.

Calculation formula

76 cents per personal mile (effective July 1, 2026), for vehicles with FMV ≤ $61,700 when first made available

• •A lower rate of 72.5 cents/mile applied from January 1 through June 30, 2026, before the mid-year IRS adjustment.
• •For vehicles above the FMV threshold, the Annual Lease Value table method applies instead, which this calculator does not model.

Worked example

An employee drives 8,000 personal miles in an employer-provided vehicle during the second half of 2026.

Taxable value per year

$6,080.00

Taxable value per month

$506.67

Estimated federal income tax (22%)

$1,337.60

8,000 personal miles at 76 cents/mile gives $6,080.00 in taxable value, added to the employee's W-2 wages for the year.

IRS company vehicle valuation methods (2026)

Per IRS Publication 15-B, Section 3.

Source: Internal Revenue Service (IRS)

Eligibility

Vehicle value threshold

The cents-per-mile method may only be used if the vehicle's fair market value did not exceed $61,700 when first made available to the employee for personal use in 2026.

Business use requirement

The vehicle must be driven at least 10,000 miles a year (business and personal combined) or be used primarily by employees, for the cents-per-mile method to apply.

Frequently asked questions

How is personal use of a company car taxed?

Personal use of an employer-provided vehicle is a taxable fringe benefit under IRC §61 and Treas. Reg. §1.61-21. Using the cents-per-mile method, the taxable value is the IRS standard mileage rate multiplied by personal miles driven.

What is the 2026 mileage rate for this calculation?

The IRS set the 2026 standard mileage rate at 72.5 cents/mile from January 1, then raised it mid-year to 76 cents/mile effective July 1, 2026, due to a sharp rise in fuel prices -- the first mid-year adjustment since 2022.

Can every company car use this method?

No, the cents-per-mile method may only be used if the vehicle's fair market value did not exceed $61,700 when first made available for personal use in 2026; otherwise, the Annual Lease Value table method applies.

Are FICA taxes also owed on this benefit?

Yes, once the taxable value is included in wages, it is subject to Social Security and Medicare (FICA) tax on both the employee and employer sides, plus federal unemployment tax (FUTA) on the employer side, unless a specific exclusion applies.