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2026 Mileage Rates: IRS Adjustments Explained

The Internal Revenue Service has once again made its annual update to the inflation-adjusted mileage rates used for 2026. These rates are crucial for calculating deductible vehicle operating costs for various purposes, including business, charitable, medical, and certain moving expenses.

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As of January 1, 2026, the standard mileage rates stand as follows:

  • For business miles, the rate is increased to 72.5 cents per mile, which includes a 35-cent allocation for depreciation. This marks a rise from the previous 70 cents in 2025.

  • Medical and moving purposes see a decrease to 20.5 cents per mile, down from 21 cents in 2025.

  • Charitable service mileage remains unchanged at 14 cents per mile, as per statutory limits.

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The business rate results from an annual study analyzing automobile operation costs, both fixed and variable. Rates for medical and moving purposes are similarly derived from this study, while charitable mileage is fixed by Congressional mandate and has remained steady for over 25 years.

Under the One Big Beautiful Bill Act (OBBBA), deductions for moving-related expenses have been disallowed permanently, except for active-duty Armed Forces personnel moving under orders related to a change of station, and, effective in 2026, members of the intelligence community relocating due to reassignment requirements.

Taxpayers using vehicles for charitable work can opt to deduct direct out-of-pocket expenses instead of standard mileage rates, provided these expenses are for gas and oil specifically. However, costs related to repairs, maintenance, depreciation, registration, tires, or insurance remain non-deductible.

Key Considerations for Business Vehicle Use – Taxpayers can choose between using standard mileage rates or calculating actual expenses for business-related vehicle use. Fluctuating fuel prices and provisioning for bonus and increased depreciation can make actual expense calculations preferable when a vehicle begins business service. Notably, the bonus depreciation rate was temporarily reinstated to 100% for the latter part of 2025.

Bear in mind that once a taxpayer has used the actual expense method, they cannot revert to standard mileage. This is determined on a per-vehicle basis. Additionally, the standard mileage rate is not applicable for hired vehicles or when more than four vehicles are used concurrently.

It's often overlooked that costs like parking, tolls, and certain state and local taxes are deductible alongside the standard mileage rate.

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Employer Reimbursements – Reimbursements for employees' business-related car expenses fall under the standard mileage allowance, remaining tax-free as long as travel details are substantiated, including time, place, mileage, and business purpose.

Employee Vehicle Expenses - The Tax Cuts and Jobs Act rendered employee business expenses non-deductible as an itemized deduction until 2025, and OBBBA has made this disallowance permanent post-2017. However, certain roles such as armed forces reservists, fee-based state or local officials, and qualifying performing artists can still deduct these expenses as income adjustments. Eligible educators also have specific deduction pathways available.

Self-employed Individuals – These taxpayers can still claim deductions for business vehicle use. Either method—standard mileage or actual expenses—permits the deduction of the business-use portion of auto loan interest on Schedule C.

Faster Deductions for Heavy SUVs – Heavier SUVs (above 6,000 pounds) are exempt from luxury vehicle depreciation limits. Taxpayers with such vehicles can combine Section 179 and bonus depreciation deductions, potentially allowing for significant write-offs, capped at $32,000 for 2026. Vehicle disposition before the five-year mark can trigger recapture of a portion of the Section 179 expense as income.

If you require guidance on optimal deduction strategies for vehicle use in business and necessary documentation, reach out to our office for expert advice.

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