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January 5, 2026

2026 Mileage Rates: Detailed IRS Update

The Internal Revenue Service has officially released the updated standard mileage rates for 2026, which incorporate adjustments for inflation. These optional rates are utilized to compute the deductible expenses associated with operating a vehicle for various purposes, including business, charity, medical, or relocation reasons.

Effective January 1, 2026, the per-mile rates for the use of a vehicle, such as a car, van, pickup, or panel truck, are as follows:

For business mileage, the rate is set at 72.5 cents per mile, which includes a 35-cent allocation for depreciation. This represents an increase from 70 cents per mile in 2025.
The rate for miles driven for medical purposes and specific moving scenarios is 20.5 cents, a slight decrease from the previous 21 cents per mile in 2025.
Miles driven in service to charitable organizations remain at 14 cents per mile.

The establishment of the business mileage rate is based on a comprehensive annual analysis of the fixed and variable costs associated with vehicle operation. Meanwhile, the rates applicable for medical and moving purposes focus on variable costs derived from the identical study. The charitable mileage rate, not having changed for over 25 years, is statutorily determined and can only be modified through Congressional action.

It's notable that the disallowance of moving-related mileage deductions due to the One Big Beautiful Bill Act (OBBBA) remains except for members of the Armed Forces on active duty. For moves conducted starting in 2026, specific members of the intelligence community are also eligible when required to relocate due to a change in their assignment.

When supporting charitable organizations through vehicle use, taxpayers might opt to deduct out-of-pocket costs like fuel and oil instead of the 14 cents per mile rate. However, expenses related to vehicle repair, maintenance, depreciation, registration, or insurance aren’t deductible under this method.

Business Vehicle Use Considerations — Taxpayers may compute their vehicle's business usage costs using actual expenses rather than standard mileage rates. Given fluctuations in fuel prices and modifications to bonus depreciation and depreciation caps for passenger vehicles, leveraging actual expenses can prove beneficial, particularly in the initial tax year of business usage. Although the bonus depreciation commenced phasing out post-2022, it temporarily reinstated to 100% for the latter part of 2025.

The standard mileage rates are inapplicable if the actual cost method (including Section 179, bonus depreciation, or MACRS depreciation) has been used previously, a rule applied per vehicle. Furthermore, the business mileage rate isn't applicable for vehicles used for hire or with concurrent use of over four vehicles.

Business owners benefit from noting that parking fees, tolls, and state and local property taxes pertinent to business use can be deducted in addition to the mileage rate.

Employer Reimbursement — Reimbursements by employers for business-related vehicle expenses, when utilizing the standard mileage method for verified business miles, remain tax-exempt, provided employees substantiate their travel in terms of time, location, mileage, and business purpose.

Employee Vehicle Expenses — Following the Tax Cuts and Jobs Act and perpetuated by the OBBBA, employees cannot claim itemized deductions for unreimbursed business use of vehicles on federal returns through 2025. Certain professionals, like reserve Armed Forces members or eligible educators, can deduct these expenses as an income adjustment on Form 1040 Sch. 1 (2025) or itemize them on Sch. A in 2026.

Self-employed Taxpayers — Retain the privilege of deducting vehicle business use, regardless of whether they select the standard mileage rate or actual expenses. They may also deduct the business use portion of interest paid on vehicle loans on Schedule C.

Bonus Depreciation for Heavy SUVs — SUVs over 6,000 pounds are exempt from luxury depreciation limits. Taxpayers can combine the Section 179 deduction (up to $32,000 in 2026) with bonus depreciation, ensuring a significant first-year deduction. Nevertheless, vehicles cannot exceed a 14,000-pound limit. Business autos are categorized with a 5-year class life, meaning early disposal can trigger a recapture of Section 179 expenses, impacting taxable income.

Contact our office if you need further advice on vehicle deduction options or required documentation standards.

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