The expression and calculation of transmission loss (TL) play key roles for solving the power system economic dispatch (ED) problem. ED including TL must compute the total TL and incremental transmission loss (ITL) by executing power flow equations. However, solving the power flow equations is time-consuming and may result in divergence by the iteration procedure. This approach is unsuitable for real-time ED in practical power systems. To avoid solving nonlinear power flow equations, most power companies continue to adopt the TL formula in ED. Traditional loss formulas are composed of network parameters and in terms of the generator’s real power outputs. These formulas are derived by several assumptions, but these basic assumptions sacrifice accuracy. In this study, a new expression for the loss formula is proposed to improve the shortcomings of traditional loss formulas. The coefficients in the new loss formula can be obtained by recording the power losses according to varying real and reactive power outputs without any assumptions. The simultaneous equations of the second-order expansion of the Taylor series are then established. Finally, the corresponding coefficients can be calculated by solving the simultaneous equations. These new coefficients can be used in optimal real and reactive power dispatch problems. The proposed approach is tested by IEEE 14-bus and 30-bus systems, and the results are compared with those obtained from the traditional B coefficient method and the load flow method. The numerical results show that the proposed new loss formula for ED can hold high accuracy for different loading conditions and is very suitable for real-time applications.