For 2026, the IRS has increased the business mileage rate to 72.5 cents per mile, a 2.5-cent jump from 2025. This optional standard rate allows taxpayers to deduct the costs of operating a personal vehicle for business purposes. Conversely, medical and military moving rates decreased to 20.5 cents per mile, while the charitable rate remains fixed at 14 cents per mile.
2026 Standard Mileage Rate Breakdown
The Internal Revenue Service issued Notice 2026-10, establishing the new standard mileage rates for taxpayers using cars, vans, pickups, or panel trucks. These figures reflect shifting inflation data and fluctuating fuel and maintenance costs.
Business Use: 72.5 cents per mile (+2.5 cents from 2025)
Medical Purposes: 20.5 cents per mile (-0.5 cents from 2025)
Moving (Military/Intel): 20.5 cents per mile (-0.5 cents from 2025)
Charitable Service: 14 cents per mile (No change)
Key Regulatory Updates and Eligibility
The IRS bases the business mileage rate on an annual study of both fixed and variable costs, such as depreciation, insurance, and repairs. In contrast, the medical and moving rates are based solely on variable expenses such as gas and oil.
Expanded Moving Deductions
Under the “One, Big, Beautiful Bill,” certain members of the intelligence community now qualify for moving expense deductions alongside active-duty Armed Forces members relocating under permanent change of station orders.
Vehicle Types
These rates apply universally to gasoline, diesel, hybrid, and fully electric automobiles.
Charitable Rates
This 14-cent figure remains stagnant because Congress sets it by statute rather than through annual IRS adjustments.
Choosing Between Standard Rate and Actual Expenses
Taxpayers often find the standard mileage rate simpler than tracking every receipt for repairs and fuel. However, specific rules govern this choice:
- First-Year Rule: You must choose the standard mileage rate in your first year of using a car for business to retain the option to switch to actual expenses later.
- Leased Vehicles: If you choose the standard rate for a leased vehicle, you must use it for the entire lease period.
- Depreciation Limits: Notice 2026-10 also defines the maximum fair market value for employer-provided vehicles using the fleet-average valuation rule.
Frequently Asked Questions (FAQs)
Can I deduct unreimbursed employee travel expenses?
Generally, no. Most employees can no longer claim miscellaneous itemized deductions for unreimbursed business travel costs on their federal income tax returns after the Tax Cuts and Jobs Act. Certain states may still allow the deduction depending on whether the state conforms to the federal tax law change or not. However, this deduction remains available for certain Armed Forces reservists, fee-basis state/local officials, performing artists, and eligible educators.
Does the 2026 mileage rate apply to EVs?
Yes. The IRS treats electric vehicles and hybrids the same as internal combustion engines for these deductions.
What happens if I did not use the standard rate last year?
If you owned the vehicle and opted for the “actual expenses” method in the first year of business use, you cannot switch to the standard mileage rate for that specific vehicle in 2026.
Professional Business Accounting Services
When considering your tax deductions for 2026, work with a professional business accounting and tax planning firm to determine your best options. Windes offers tax planning and business accounting services to businesses in Long Beach, Los Angeles, Orange County, and beyond. Our team can help you determine whether to use the standard mileage rate or the actual expense method to maximize your deduction in 2026. The IRS changes the standard mileage rate each year, so tax planning with Windes can help you track your gas and mileage expenses to save the most money year over year. Contact Windes today to learn more about possible tax deductions for your business.