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January 5, 2026

2026 Mileage Rates Update from IRS

The IRS has released the updated standard mileage rates for 2026, reflecting adjustments for inflation. These rates are essential for small business owners and professionals calculating their vehicle operation costs for business, charitable, medical, or moving purposes.

Starting January 1, 2026, the standard mileage rates for cars, vans, pickups, or panel trucks are as follows:

72.5 cents per mile for business purposes, reflecting a small increase from 70 cents in 2025. This includes a 35-cent allocation for depreciation.
20.5 cents per mile for medical or specific moving expenses, slightly decreased from 21 cents in 2025.
14 cents per mile for services provided to charitable organizations.

The business mileage rate is determined through an annual cost analysis of operating automobiles, such as fuel and maintenance. The rate for medical or moving expenses is similarly derived, emphasizing variable costs. Meanwhile, the rate for charitable work is fixed by statute, unchanged for over two decades.

It's noteworthy that moving-related expenses have been largely disallowed except for active-duty military members relocating under a permanent change of station or, from 2026, for intelligence community members reassigned due to relocation.

When using a vehicle for charitable services, itemizing taxpayers may prefer deducting actual expenses like gas and oil rather than using the per-mile rate. However, costs like depreciation and insurance remain non-deductible.

Key Points for Business Vehicle Use – Calculating actual vehicle expenses can be advantageous for certain business situations over standard mileage rates. Factors like fluctuating fuel costs and depreciation incentives may make this more beneficial, particularly in a vehicle's first year of use under bonus depreciation guidelines.

It's important to remember that taxpayers cannot revert to standard mileage rates once they opt for actual cost calculations (involving Section 179 or MACRS depreciation). Additionally, this method isn't applicable to vehicles used for hire or more than four vehicles simultaneously.

Business owners often overlook additional deductions, such as parking fees, tolls, and business-applied state and local taxes, which complement the mileage rates.

Employer Reimbursement – Employers can provide tax-free reimbursements to employees for car expenses using standard mileage allowances, assuming proper documentation of business-related travel details.

Employee Vehicle Expenses – Changes from the Tax Cuts and Jobs Act eliminated employee business expenses unless explicitly allowed by specific exceptions, such as military reserve drills or eligible educators with out-of-pocket vehicle costs.

Self-employed Individuals – Self-employed taxpayers maintain the ability to deduct vehicle business use. Regardless of whether the standard or actual expense method is elected, loan interest proportionate to business use is deductible on Schedule C.

Sped-Up Depreciation for Heavy SUVs – Heavier SUVs not limited by luxury auto depreciation rules allow for generous deductions under Section 179 and bonus depreciation, providing potential for significant first-year tax relief. However, vehicles must weigh below 14,000 pounds, and any disposal within five years could result in recapture of deductions.

If you need guidance on vehicle deductions or wish to explore the best options for your business use, please reach out to Bryant CPA LLC for personalized advice.

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