The Internal Revenue Service announced in December 2025 that the optional standard mileage rate for business driving will increase to 72.5 cents per mile for 2026 — up 2.5 cents from the 70-cent rate that applied in 2025. The change takes effect January 1, 2026.
For the millions of self-employed workers, small business owners, and employees who use their personal vehicles for work, this rate increase can translate into a meaningfully larger tax deduction.
What Are the 2026 IRS Mileage Rates?
| Purpose | 2026 Rate | 2025 Rate | Change |
|---|---|---|---|
| Business driving | 72.5¢ per mile | 70¢ per mile | +2.5¢ |
| Medical / moving (active military only) | 21¢ per mile | 21¢ per mile | No change |
| Charitable driving | 14¢ per mile | 14¢ per mile | No change |
The charitable mileage rate is set by statute and does not adjust for inflation — it has been stuck at 14 cents per mile for decades. The medical/moving rate for active-duty military members is adjusted periodically based on variable vehicle costs.
Who Can Use the Standard Mileage Rate?
Not everyone is eligible to use the simplified mileage rate. The IRS has specific rules:
- Self-employed individuals and small business owners can use the rate for any vehicle used in their business, including cars, vans, pickups, and panel trucks.
- W-2 employees who are not reimbursed by their employer cannot deduct business mileage on their federal return. The Tax Cuts and Jobs Act of 2017 suspended the employee business expense deduction, and the One Big Beautiful Bill Act made that suspension permanent.
- Five or more vehicles used simultaneously in your business disqualify you from using the standard rate — you must use the actual expense method instead.
- You must choose the standard mileage rate in the first year you place a vehicle in service for business. If you use actual expenses in year one, you cannot switch to the standard rate for that vehicle later.
Standard Mileage Rate vs. Actual Expense Method
The standard mileage rate is simple — multiply your business miles by 72.5 cents. The actual expense method lets you deduct the real costs of operating the vehicle: gas, oil, insurance, registration fees, repairs, tires, and depreciation (or lease payments), multiplied by your business-use percentage.
| Standard Mileage Rate | Actual Expense Method | |
|---|---|---|
| Best for | High-mileage, fuel-efficient vehicles | Expensive vehicles, high insurance/repair costs |
| Record-keeping | Mileage log only | All receipts + mileage log for business % |
| Flexibility | Can switch to actual in future years | Cannot switch back to standard rate |
| Depreciation | Built into the rate | Separate depreciation calculation required |
How Much Is the 2026 Mileage Deduction Worth?
| Annual Business Miles | 2026 Deduction (72.5¢) | 2025 Deduction (70¢) | Difference |
|---|---|---|---|
| 5,000 miles | $3,625 | $3,500 | +$125 |
| 10,000 miles | $7,250 | $7,000 | +$250 |
| 20,000 miles | $14,500 | $14,000 | +$500 |
| 30,000 miles | $21,750 | $21,000 | +$750 |
For a self-employed worker in the 22% federal tax bracket who drives 15,000 business miles in 2026, the mileage deduction alone saves roughly $2,381 in federal income tax (15,000 × $0.725 × 22%) — plus reduces the net profit subject to self-employment tax.
What Counts as Business Mileage?
Only miles driven for genuine business purposes qualify. Trips that count:
- Driving to meet clients or customers
- Travel between two work locations (for those with multiple jobs)
- Travel to a temporary work location away from your regular workplace
- Running business errands (office supplies, bank deposits, post office for business mail)
What does not count:
- Commuting — the drive from home to your regular place of business is never deductible, no matter how far
- Personal errands mixed into a business trip (only the business portion counts)
Mileage Log Requirements
The IRS requires "contemporaneous" records — meaning you should record mileage at or near the time of each trip, not reconstruct it from memory at year-end. A compliant mileage log must capture for each trip: the date, business purpose, starting location and destination, and miles driven. Apps like MileIQ, Everlance, or Stride automatically track mileage via GPS and satisfy IRS record-keeping requirements without a paper log.
Mileage Deduction and Self-Employment Tax
For self-employed individuals, the mileage deduction reduces your net self-employment income, which reduces both your income tax and your self-employment tax. That double benefit makes business mileage one of the most valuable deductions available to freelancers and sole proprietors. Use our self-employment tax calculator to see how mileage and other business expenses affect your total SE tax liability.
Charitable and Medical Mileage
If you drive for volunteer work with a qualifying charity, you can deduct 14 cents per mile. This rate is significantly below the actual cost of operating a vehicle and has been unchanged for many years — it's set by Congress, not adjusted by the IRS. Medical mileage at 21 cents per mile is deductible for trips to receive medical care, but only if you itemize and only to the extent total medical expenses exceed 7.5% of your AGI. Very few taxpayers benefit from the medical mileage deduction in practice.
For a broader view of how all your deductions affect your federal tax bill, try our income tax calculator.
Maximizing Your Mileage Deduction
The IRS standard mileage rate is the simplest way to deduct vehicle costs for business purposes — but there are rules, record-keeping requirements, and strategic choices involved in claiming it correctly and getting the full benefit.
Standard Rate vs. Actual Expense Method
Instead of the standard mileage rate, you can deduct actual vehicle expenses: gas, oil changes, tires, insurance, registration, depreciation, and repairs — multiplied by your business use percentage (business miles ÷ total miles driven). The actual expense method requires more record-keeping but can produce a larger deduction for high-cost or rapidly depreciating vehicles. You must choose one method in the first year you use the vehicle for business; switching from standard mileage to actual is generally allowed, but switching from actual to standard has restrictions.
Record-Keeping Requirements
The IRS requires a contemporaneous mileage log — records kept at or near the time of each trip, not reconstructed at year-end. For each business trip, record: date, business purpose, starting and ending location, and miles driven. Apps like MileIQ or Everlance automate most of this. The IRS has successfully disallowed large mileage deductions where no contemporaneous log existed — the log is the deduction, not an optional backup.
What Counts as Business Mileage
Business mileage includes driving to meet clients, traveling between work locations, running business errands, and attending work-required training or meetings. Commuting — driving from home to your regular work location — is explicitly not deductible. However, if your home qualifies as your principal place of business (qualifying home office), driving from home to a client's location does count as business mileage.
The Real Tax Value of Mileage Tracking
At 70 cents per mile, a self-employed person who drives 10,000 business miles per year can deduct $7,000. In the 22% bracket, that saves approximately $1,540 in federal income tax. Since mileage deductions also reduce net profit, they simultaneously reduce SE taxable income — saving an additional ~$1,071 in SE tax (15.3% × $7,000). Total combined tax savings: approximately $2,611 on 10,000 documented business miles. The mileage log is worth keeping.
Use our SE tax calculator to see how business deductions like mileage reduce your SE tax liability, and our income tax calculator to model your total federal tax estimate with and without the deduction.