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2026 Mileage Rates: Key Updates from the IRS

The Internal Revenue Service (IRS) has released its annual adjustment of the standard mileage rates for 2026, providing crucial benchmarks for calculating deductible automobile expenses related to business, charity, medical, and certain moving purposes. These rates help individuals and businesses ascertain the deductible costs of operating vehicles across various activities.

Starting January 1, 2026, the updated mileage rates for vehicle usage, including cars, vans, pickups, and panel trucks, are as follows:

  • 72.5 cents per mile for business travel, reflecting an increase from 70 cents in 2025, which incorporates a 35-cent-per-mile depreciation element.

  • 20.5 cents per mile for medical travel and select moving expenses, showing a slight decrease from 21 cents in the prior year.

  • 14 cents per mile for charitable activities, a rate that remains unchanged due to statutory mandates requiring Congressional intervention for amendments.

The business standard rate derives from an extensive annual analysis of both fixed and variable costs associated with vehicle operations. In contrast, the medical and moving rate adjustments focus primarily on variable cost fluctuations. The charitable mileage rate remains constant, having been fixed at 14 cents for over two decades.

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Despite the One Big Beautiful Bill Act (OBBBA) disallowing moving-related mileage expenses, exceptions exist for Armed Forces members on active duty moving per military orders, as well as intelligence personnel relocating due to assignment changes from 2026 onward.

When engaging in charitable endeavors, taxpayers might opt to diary actual expenses like fuel and oil costs instead of the 14-cent rate, though they must remember that general repairs, maintenance, depreciation, and other associated costs aren't deductible.

Considerations for Vehicle Use in Business – While taxpayers can alternatively calculate exact vehicle operation costs for business instead of the standard mileage deduction, it is essential to consider factors like fluctuating fuel prices, bonus depreciation opportunities, and passenger vehicle depreciation limits. The 100% bonus depreciation that phased out post-2022 and briefly returned in 2025 underscores the dynamic nature of tax advantages, especially during a vehicle's inaugural business service year.

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It's important to note that if a vehicle has been depreciated under Section 179 or the Modified Accelerated Cost Recovery System (MACRS) in previous tax years, one cannot switch to the mileage method thereafter. Moreover, the mileage method is not applicable for hired vehicles or when operating more than four vehicles simultaneously.

Often overlooked, taxpayers using standard mileage rates can also deduct additional expenses like tolls, parking fees, and applicable property taxes corresponding to business use.

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Employer Reimbursement – When employers reimburse employee vehicle costs at the standard mileage rate for authenticated business travel, such reimbursements remain tax-free, provided the employee furnishes adequate substantiation of travel particulars.

Employee Vehicle Expenses – After the Tax Cuts and Jobs Act, employee deductions for business vehicle use disappeared through 2025, and the OBBBA cemented such deductions as permanently inadmissible. However, specific categories, including certain armed forces reservists, fee-based state or local officials, artists, and eligible educators, retain the ability to write off non-reimbursed vehicle expenses either as income adjustments or itemized deductions.

Self-employed individuals continue to benefit by deducting vehicle usage costs against business income, along with proportionate interest on auto loans charged to business operations through Schedule C.

Rapid Write-Offs for Heavy SUVs – Many modern SUVs exceeding 6,000 pounds evade luxury vehicle depreciation caps, allowing significant first-year write-offs via Section 179, up to $32,000 in 2026, and further accelerated through bonus depreciation. Yet caution is advised due to potential recapture of Section 179 deductions if vehicles exit business service prematurely during their five-year asset lifecycle.

For further guidance on maximizing vehicle-related tax deductions or clarifying documentation mandates, do not hesitate to reach out to our office.

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