New IRS Standard Mileage Rates for 2026

The Internal Revenue Service (IRS) has released the new standard mileage rates for the 2026 tax year. For small business owners, freelancers, and self-employed individuals, this update matters more than it may seem at first glance. If you use your personal vehicle for business purposes, even occasionally, mileage deductions can play a meaningful role in lowering your overall tax liability.

Each year, the IRS adjusts mileage rates to reflect changes in fuel prices, maintenance costs, insurance, and vehicle depreciation. Using the correct rate is essential for accurate deductions, clean records, and effective tax planning. This guide breaks down the 2026 IRS mileage rates, explains who is eligible, compares them to prior years, and outlines how to decide between the standard mileage rate and the actual expense method.

Key Highlights

• The IRS business mileage rate increased to 72.5 cents per mile in 2026, up from 70 cents in the previous year, effective January 1st, 2026.

• Separate mileage rates apply for charitable, medical, and qualified moving purposes.

• The business standard mileage rate offers simplicity, but it is not always the best option.

• Accurate, timely mileage records are required to support your deduction.

• Proactive planning helps small business owners maximize vehicle deductions while avoiding common mistakes.

What Are the IRS Standard Mileage Rates for 2026?

The IRS standard mileage rate is a simplified way to deduct the cost of using a vehicle for specific purposes, such as business-related driving. Instead of tracking every individual expense related to your car or panel truck, you multiply your business miles by a fixed per-mile applicable rate set by the IRS.

The IRS reviews economic data each year and updates the rate to account for changes in:

• Fuel prices

• Repairs

• Insurance

• Overall vehicle ownership costs

For 2026, the updated mileage rate for business takes effect on January 1 and apply to miles driven throughout the calendar year.

2026 standard mileage rates by category

For 2026, the IRS has established the following mileage rates, as outlined in the official IRS standard mileage rate guidance:

• Business mileage: 72.5 cents per mile

  • This rate applies to miles driven for ordinary and necessary business purposes, such as traveling to client meetings, job sites, or business-related errands.

• Charitable mileage rate: 14 cents per mile

  • This rate applies when you drive in the service of a qualified charitable organization. Unlike the business rate, this amount for charitable purposes is set by statute and does not change annually.

• Medical and qualified moving mileage: 20.5 cents per medical mile

  • This rate applies to eligible travel for medical and moving purposes for certain active duty members of the Armed Forces who meet IRS requirements.

Understanding which category applies is vital because using the wrong rate can result in inaccurate itemized deductions or issues if your tax return is scrutinized by the IRS. 

How the 2026 Mileage Rate Compares to Prior Years

The 2026 IRS mileage rate reflects a continued upward trend in recent years. Increases typically occur when fuel, maintenance, and vehicle ownership costs rise across the economy.

While the exact year-over-year change may seem modest on a per-mile basis, the impact can add up quickly. For example, a self-employed consultant who drives 15,000 business miles per year would see a noticeably larger deduction at 72.5 cents per mile than at a lower prior-year rate of 70 cents.

Staying current with mileage rates matters for more than compliance. Using outdated numbers can result in underclaiming deductions, which means leaving money on the table. For businesses that reimburse employees for mileage, incorrect rates can also create payroll and accounting issues.

This is one reason many business owners rely on professional, tax-deductible support from a dedicated small business tax service like 1-800Accountant, America's leading virtual accounting firm, rather than trying to manage annual updates on their own.

Who Can Use the Standard Mileage Rate

The standard mileage rate is available to many, but not all, taxpayers. Eligibility depends on how the vehicle is used and how it has been depreciated in prior years.

In general, the following groups can use the standard mileage rate 2026 for business driving:

• Sole proprietors and single-member LLC owners

• Independent contractors and freelancers

• Partners in partnerships and owners of pass-through entities

• Small business owners using personally owned cars for business purposes, including fully electric, hybrid automobiles, and diesel-powered vehicles

Unreimbursed employee travel expenses cannot be deducted under current federal law. However, certain exceptions apply, such as:

• Qualified performing artists

• Armed Forces reservists

• Fee-based state or local government officials

If a vehicle has been depreciated using specific accelerated methods or claimed with a Section 179 deduction in prior years, the standard mileage rate may no longer be an option. IRS vehicle usage guidance outlines these eligibility rules in detail.

Standard Mileage Rate vs. Actual Expense Method

When deducting vehicle expenses, business owners generally choose between two methods: 

• The standard mileage rate

• The actual expense method

When evaluating the standard mileage vs. actual expense method, you'll find that each approach has advantages, and the right choice depends on your vehicle, driving habits, and recordkeeping preferences.

When the standard mileage rate makes sense

The standard mileage rate is often appealing because of its simplicity. You can track mileage driven for business purposes and apply the IRS rate. With the standard mileage rate, there's no need to track every receipt for gas, oil changes, or repairs.

This method often works well when:

• You drive a fuel-efficient or lower-cost vehicle

• Your maintenance and insurance expenses are relatively modest

• You want straightforward recordkeeping

• You use your vehicle consistently but not excessively for business

Many freelancers and consultants prefer this method because it reduces administrative burden while still providing a meaningful deduction.

When the actual expense method may be better

The actual expense method allows you to deduct the business portion of your real vehicle costs. This includes gas, repairs, insurance, registration fees, and depreciation.

This approach may be more beneficial when:

• You drive a high-cost vehicle

• Maintenance, repairs, or insurance expenses are significant

• Your business mileage represents a large percentage of total driving

• You are comfortable maintaining detailed financial records

Once you choose the actual expense method for a vehicle, switching back to the business standard mileage rate later may not be allowed. This makes upfront planning especially important, often with support from a year-round tax advisory team.

Recordkeeping Requirements You Cannot Ignore

Regardless of which deduction method you choose, recordkeeping is non-negotiable. The IRS requires contemporaneous records that clearly substantiate business mileage.

At a minimum, your mileage log should include:

• Date of each trip

• Starting and ending locations

• Purpose of the trip

• Number of miles driven

You can use a paper log, a spreadsheet, or a digital mileage-tracking app. The key is consistency and accuracy. Reconstructed logs created at tax time are far more likely to be challenged than records maintained throughout the year.

Strong recordkeeping also supports other vehicle tax deductions and helps ensure your books are audit-ready.

How the 2026 Mileage Rate Impacts Small Business Tax Planning

Changes in the mileage rate can influence more than just your annual deduction. For businesses that make quarterly estimated tax payments, mileage deductions affect taxable income throughout the year.

A higher mileage rate may reduce taxable income more than expected, potentially lowering estimated payments. On the other hand, failing to account for increased deductions until filing time can result in overpaying taxes during the year.

Proactive planning helps avoid these issues. Reviewing mileage trends during quarterly check-ins with your accountant allows business owners to adjust estimates, cash flow projections, and reimbursement policies in real time rather than reacting after the fact.

This proactive approach is central to effective small business tax management. It aligns with the value of ongoing accounting support from a partner rather than a once-a-year tax preparer.

Common Mileage Deduction Mistakes to Avoid

Even experienced owners and gig workers make mistakes with business mileage deduction 2026. Some of the most common deductible cost issues to avoid include:

• Mixing personal and business mileage: Commuting from home to a regular office location is generally not deductible, even if you own the business.

• Failing to keep timely records: Mileage logs created months later are less reliable and harder to defend.

• Switching deduction methods incorrectly: Changing from standard mileage to actual expenses without understanding the rules can disqualify deductions.

• Overlooking partial business use: When a vehicle is used for both personal use and business purposes, only the business portion is deductible.

Avoiding these errors often comes down to education, consistency, and guidance from professionals who understand how the rules apply to your operations.

Get Help Maximizing Your Vehicle Deductions

Mileage deductions are just one piece of a larger tax picture. Choosing the optimal deduction method, maintaining proper records, and integrating vehicle expenses into your overall strategy can make a meaningful difference in your tax outcome.

Working with dedicated CPAs, EAs, bookkeepers, and tax professionals at 1-800Accountant gives you clarity, confidence, and support beyond basic compliance. From bookkeeping and mileage tracking to proactive tax planning, having an experienced partner for an affordable, tax-deductible fee helps ensure that every eligible deduction works in your favor.

Make the most of the new IRS standard mileage rates for 2026 and build a smarter, more resilient tax strategy with 1-800Accountant. Schedule a free 30-minute consultation today to get started.