2026 IRS Mileage Rate Increases to 72.5 Cents per Mile
Everything you need to know about the new standard mileage rates — who qualifies, how to claim the deduction, and the costly mistakes to avoid.
Effective January 1, 2026, the Internal Revenue Service has set the standard mileage rate for business use of a vehicle at 72.5 cents per mile. This is a 2.5-cent increase from the 2025 rate of 70 cents and continues a steady upward trend driven by rising costs of vehicle ownership — fuel, insurance, depreciation, and maintenance.
If you use a car, van, pickup, or panel truck for business, you may be able to deduct the cost of operating that vehicle on your tax return. The IRS gives you two ways to do this: the Standard Mileage Rate or the Actual Expense Method. For most self-employed professionals and gig workers, the standard mileage rate is the simpler and often more valuable option.
The standard mileage rate is not a number the IRS picks arbitrarily. Each year, the agency commissions an independent study of the fixed and variable costs of operating a vehicle in the United States. This study examines fuel costs, insurance premiums, maintenance expenses, tire wear, depreciation, and registration fees across the country. The resulting rate is a per-mile amount designed to approximate the average total cost of operating a vehicle for business purposes.
Understanding this rate — and knowing how to claim it properly — can put thousands of dollars back in your pocket. This guide covers everything you need to know.
Official 2026 Standard Mileage Rates
Business
Self-employed, independent contractors, gig workers
Medical & Moving
Qualified medical expenses & active-duty military moves
Charitable
Driving in service of a qualified charitable organization
How the Standard Mileage Rate Works
The concept is straightforward: instead of tracking every receipt for gasoline, oil changes, tire rotations, insurance premiums, and depreciation, you simply multiply your total business miles by the IRS rate. The result is your deduction.
For example, if you drove 15,000 business miles in 2026, your calculation is:
15,000 miles × $0.725 = $10,875 deduction
That $10,875 comes directly off your taxable income. If you are in the 22% federal tax bracket, this single deduction saves you approximately $2,393 in federal income taxes — plus additional savings on self-employment tax (15.3% on net earnings) and any applicable state income tax.
The standard mileage rate is designed to cover all of your vehicle operating costs. When you use this method, you cannot separately deduct gasoline, oil, insurance, repairs, depreciation, or lease payments for the same vehicle. You can, however, still deduct parking fees and tolls that are directly related to business travel — those are separate from the per-mile rate.
This rate applies to cars, vans, pickups, and panel trucks. It does not apply to vehicles used in a fleet operation (five or more vehicles used simultaneously) or to vehicles for which you have already claimed a Section 179 deduction or MACRS depreciation in a prior year.
Historical Rate Trends (2020–2026)
The business standard mileage rate has increased significantly over the past several years, reflecting the rising cost of vehicle ownership in the U.S. Here is the full history since 2020:
| Year | Business | Medical/Moving | Charitable |
|---|---|---|---|
| 2020 | 57.5¢ | 17¢ | 14¢ |
| 2021 | 56¢ | 16¢ | 14¢ |
| 2022 (Jan–Jun) | 58.5¢ | 18¢ | 14¢ |
| 2022 (Jul–Dec) | 62.5¢ | 22¢ | 14¢ |
| 2023 | 65.5¢ | 22¢ | 14¢ |
| 2024 | 67¢ | 21¢ | 14¢ |
| 2025 | 70¢ | 21¢ | 14¢ |
| 2026 | 72.5¢ | 22¢ | 14¢ |
A few things stand out. The rate actually dropped in 2021 to 56 cents — down 1.5 cents from 2020 — because the COVID-19 pandemic dramatically reduced fuel prices and vehicle usage nationwide. Then in 2022, soaring gas prices forced the IRS to take the rare step of issuing a mid-year rate increase, bumping the business rate from 58.5 cents to 62.5 cents effective July 1. That mid-year adjustment was only the third time the IRS had done so in the history of the standard mileage rate.
Since then, the rate has risen steadily: 65.5 cents in 2023, 67 cents in 2024, 70 cents in 2025, and now 72.5 cents in 2026. Over this seven-year period, the business rate has increased by 15 cents per mile — a 26% increase. For a driver logging 20,000 business miles per year, that translates to an additional $3,000 in annual deductions compared to 2020.
Important note about the charitable rate: Unlike the business and medical/moving rates, the charitable mileage rate is not set by the IRS. It is fixed by Congress under Internal Revenue Code Section 170 and has remained at 14 cents per mile for over two decades. It can only be changed by an act of Congress.
Standard Mileage Rate vs. Actual Expense Method
The IRS gives taxpayers two options for deducting vehicle costs. Understanding the difference is critical because choosing the wrong method — or switching at the wrong time — can cost you thousands of dollars or disqualify your deduction entirely.
Standard Mileage Rate
Multiply your business miles by the IRS rate (72.5¢ in 2026). One simple calculation.
Pros
- Dead simple — just track your miles
- No need to save gas receipts or repair invoices
- Often yields a higher deduction for fuel-efficient vehicles
- Easier to defend in an audit
- Includes a built-in depreciation component
Cons
- May leave money on the table if your actual costs are very high
- Cannot be used for fleet vehicles (5+ used simultaneously)
- Cannot be used if you previously claimed Section 179 or MACRS depreciation on the vehicle
Actual Expense Method
Track every vehicle cost, then deduct the business-use percentage.
Pros
- Can result in a larger deduction for expensive or high-maintenance vehicles
- Includes depreciation (MACRS), which can be very valuable for new cars
- Better for vehicles with low mileage but high fixed costs
Cons
- Requires meticulous record-keeping of every expense
- Must save all receipts (gas, oil, tires, insurance, repairs, registration)
- Must calculate business-use percentage accurately
- More complex depreciation calculations
- Harder to defend in an audit without detailed records
Bottom line: If you drive a relatively fuel-efficient car and don't want to deal with shoebox-loads of receipts, the standard mileage rate is almost certainly your best option. If you drive an expensive vehicle with high insurance and maintenance costs, or if your business-use percentage is very high, run the numbers both ways — you may find the actual expense method puts more money back in your pocket. Need help deciding? See our comparison page for tools that make this calculation easy.
Who Qualifies for the Business Mileage Deduction?
Not everyone who drives for work can claim this deduction. Here is a breakdown of who can and who cannot use it, and why.
Self-Employed Individuals (Schedule C Filers)
If you are a sole proprietor, freelancer, or independent contractor who files Schedule C with your tax return, you are the primary audience for this deduction. Whether you are a consultant, a real estate agent driving between showings, a photographer traveling to shoots, or a plumber driving to job sites — your business mileage is deductible. You report the deduction on Schedule C (Profit or Loss From Business), which reduces both your income tax and your self-employment tax.
Gig Economy Workers
Drivers for Uber, Lyft, DoorDash, Instacart, Amazon Flex, and similar platforms are classified as independent contractors and file Schedule C. This means every business mile you drive is deductible at the 72.5-cent rate. tiktraq goes further by capturing the full range of deductible miles—including pickups, repositioning, and the drive home from your last drop-off. For a typical full-time rideshare driver, a dedicated mileage tracker can add 30–40% more documented business miles compared to platform summaries alone.
W-2 Employees
This is where it gets nuanced. The Tax Cuts and Jobs Act (TCJA) of 2017 suspended the deduction for unreimbursed employee business expenses — including mileage — for tax years 2018 through 2025. Those expenses were previously deductible as a miscellaneous itemized deduction on Schedule A, subject to a 2% of AGI floor. Starting in the 2026 tax year, this TCJA provision is currently scheduled to expire, which means W-2 employees may once again be able to deduct unreimbursed business mileage as an itemized deduction. However, Congress may extend or modify these provisions, so consult a tax professional for the latest guidance.
Medical & Moving Mileage
You can deduct 22 cents per mile for driving to and from medical appointments if you itemize deductions (medical expenses exceeding 7.5% of AGI). For the moving expense deduction, the TCJA limited it exclusively to active-duty members of the Armed Forces who move due to a military order for a permanent change of station. This limitation is also scheduled to expire after the 2025 tax year, but may be extended by Congress.
What is NOT deductible
Commuting miles are never deductible. Your daily drive from home to your regular place of work and back is considered a personal commute under IRS rules. This is true even if you make business calls or listen to work-related material during the drive. The one exception: if you have a qualifying home office that serves as your principal place of business, then drives from your home to other work locations become business miles rather than commuting miles.
Real Dollar Impact: 2026 Deduction Examples
Here is what the 2026 rate means in real dollars at different mileage levels, compared to the 2025 rate of 70 cents per mile:
| Business Miles | 2026 Deduction (72.5¢) | 2025 Deduction (70¢) | Extra in 2026 |
|---|---|---|---|
| 10,000 | $7,250 | $7,000 | $250 |
| 15,000 | $10,875 | $10,500 | $375 |
| 20,000 | $14,500 | $14,000 | $500 |
| 25,000 | $18,125 | $17,500 | $625 |
| 30,000 | $21,750 | $21,000 | $750 |
10,000 miles
$7,250
Part-time freelancer or realtor
20,000 miles
$14,500
Full-time gig driver or sales rep
30,000 miles
$21,750
Heavy-mileage business driver
Remember: These are deductions, not credits. A deduction reduces your taxable income. Your actual tax savings depend on your marginal tax bracket. A $14,500 deduction for someone in the 24% bracket saves $3,480 in federal income tax alone — plus additional savings on self-employment tax (up to 15.3%) if you are self-employed, and any applicable state income taxes.
IRS Documentation Requirements: The 5 Data Points
Claiming the deduction is the easy part. Defending it in an audit is where most people fail. Under IRC Section 274(d) and Treasury Regulation 1.274-5T, the IRS requires a "contemporaneous" written record — meaning you must log your trips at or near the time they occur. Reconstructing a mileage log at the end of the year (or worse, after receiving an audit notice) does not satisfy this requirement, and the IRS will disallow your entire mileage deduction if your records are deemed inadequate.
For each business trip, your log must contain these five data points:
1. Date of the Trip
The month, day, and year. Weekly summaries are not sufficient for individual trip documentation.
2. Miles Driven
The total mileage for each specific trip, not a daily or weekly lump sum.
3. Destination
Where you went — the city, town, or specific address. "Various" is not acceptable.
4. Business Purpose
Why you made the trip: "Client meeting with Smith Co.," "Property showing at 123 Oak St.," etc.
5. Odometer Readings
Your total odometer reading at the start and end of the tax year (January 1 and December 31).
The IRS is explicit: estimates are not acceptable. If you get audited and cannot produce a contemporaneous log with these five elements, your mileage deduction can be disallowed in full — even if you legitimately drove those miles. The burden of proof is on you, the taxpayer.
This is the core reason automatic mileage tracking apps exist. A well-designed tracker records the date, distance, origin, destination, and lets you tag the business purpose — all in real time, as you drive. For a deeper dive on building audit-proof records, see our guide on how to create an IRS-proof mileage log.
The First-Year Rule: Switching Between Methods
One of the most misunderstood aspects of the mileage deduction is the IRS rule governing when you can use each method and when you can switch between them. Getting this wrong can lock you into a less favorable method for the entire life of a vehicle.
Here are the rules, straight from IRS Publication 463:
Rule 1: Standard mileage rate must be used in the first year
If you want to ever use the standard mileage rate for a particular vehicle, you must elect to use it in the first year the vehicle is placed in service for business. You can make this election on your tax return for that year.
Rule 2: After the first year, you can switch year to year
As long as you used the standard mileage rate in the first year, you can switch back and forth between the standard rate and actual expenses in later years. Many taxpayers run the numbers both ways each year and choose whichever yields the larger deduction. When switching to actual expenses after using the standard rate, you must use straight-line depreciation for the remaining estimated useful life of the vehicle.
Rule 3: If you use actual expenses first, you are locked in
If you choose the actual expense method in the first year, you cannot switch to the standard mileage rate for that vehicle, ever. You are committed to actual expenses for as long as you use that car for business.
Rule 4: Certain depreciation methods disqualify you
If you claimed a Section 179 deduction or used any MACRS depreciation method other than straight-line on the vehicle, you can never use the standard mileage rate for that vehicle.
Practical advice: If you are buying or leasing a new vehicle for business use, strongly consider using the standard mileage rate in the first year even if the actual expense method yields a slightly higher deduction. This preserves your flexibility to switch methods in future years. Once you are locked into actual expenses, there is no going back.
When to Use the Actual Expense Method Instead
While the standard mileage rate is simpler and works well for most people, there are specific scenarios where the actual expense method may yield a significantly larger deduction:
Expensive vehicles with high ownership costs
If you drive a newer luxury vehicle with high insurance premiums and expensive maintenance, your actual per-mile costs may exceed 72.5 cents. A $60,000 vehicle with $3,000/year in insurance, $2,000 in maintenance, $4,000 in fuel, and $8,000 in depreciation costs far more per mile than the standard rate if you only drive 15,000 business miles.
Low mileage, high fixed costs
The standard mileage rate is proportional to miles driven. If you drive relatively few business miles but your vehicle costs remain high (because insurance, registration, and depreciation are mostly fixed costs), actual expenses may produce a better result.
High business-use percentage
If you use your vehicle 90%+ for business, you can deduct 90% of all actual costs. This amplifies the benefit of every dollar spent on the vehicle.
Vehicles with accelerated depreciation
In the first few years of owning a new vehicle, MACRS depreciation can be substantial — especially with bonus depreciation (though bonus depreciation phases down after 2022). This front-loaded deduction can make actual expenses significantly more valuable early in a vehicle's life.
The best approach: Calculate your deduction both ways for your first year and compare the results. If they are close, choose the standard mileage rate for the flexibility it provides in future years. If actual expenses are significantly higher, the math may justify the extra recordkeeping burden.
8 Common Mileage Deduction Mistakes (and How to Avoid Them)
The mileage deduction is one of the most frequently audited items on Schedule C returns. Here are the mistakes the IRS sees most often — and how to steer clear of them.
Not keeping a contemporaneous log
This is the number one reason mileage deductions get disallowed. If you reconstruct your log at year-end using calendar entries and Google Maps, you are taking a significant risk. The IRS requires records made "at or near the time" of each trip. A mileage tracking app that records trips automatically is the gold standard.
Claiming commuting miles as business
Your drive from home to your regular workplace is a commute, not a business trip. This is the most common error on mileage logs. The IRS defines your "tax home" as your regular place of business, and travel to it is not deductible. The exception: if your home office is your principal place of business (you work from home regularly and have a dedicated space), then drives to other work locations are business miles.
Using round numbers
If every entry in your log is exactly 10, 15, or 20 miles, the IRS treats this as a red flag indicating you estimated rather than actually tracking. Real mileage has decimals and odd numbers — 12.3 miles, 17.8 miles. An automatic tracker solves this by recording GPS-accurate distances.
Double-dipping on deductions
You cannot use the standard mileage rate and also deduct actual vehicle expenses (gas, insurance, depreciation) for the same vehicle in the same year. You must choose one method. You can, however, deduct parking fees and tolls separately under either method.
Forgetting the first-year election
If you use actual expenses in the first year a vehicle is placed in service for business, you are permanently locked out of the standard mileage rate for that vehicle. Many taxpayers learn this the hard way when they realize the standard rate would have been more valuable in subsequent years.
Not tracking all deductible miles
Many gig workers only count miles from platform summaries, but the IRS allows you to deduct far more: pickups, repositioning, and the drive home after your last trip. tiktraq captures all of these automatically. Missing them can cost hundreds or even thousands of dollars.
Mixing personal and business trips
If you make a personal stop during a business trip (dropping off dry cleaning on the way to a client meeting, for example), you need to separate the personal miles from the business miles. Only the business portion is deductible. A GPS-based mileage tracker with trip classification makes this straightforward.
Failing to record odometer readings
The IRS requires your total odometer reading at the beginning and end of the tax year. This allows them to verify that the sum of your business and personal miles aligns with the total miles driven. Forgetting to log your January 1 reading is a surprisingly common oversight.
Key Takeaways for 2026
The 2026 business standard mileage rate is 72.5 cents per mile — the highest it has ever been.
The medical/moving rate is 22 cents per mile. The charitable rate remains 14 cents per mile (set by statute).
Self-employed individuals and gig workers deduct mileage on Schedule C, reducing both income tax and self-employment tax.
W-2 employees may be able to deduct unreimbursed business mileage again starting in 2026, depending on Congressional action on TCJA provisions.
You must use the standard mileage rate in the first year a vehicle is placed in service for business if you ever want the option to use it.
The IRS requires five data points for each trip: date, miles, destination, business purpose, and annual odometer readings.
Records must be contemporaneous — logged at or near the time of the trip, not reconstructed later.
Parking fees and tolls are deductible separately under either the standard mileage rate or actual expense method.
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