IRS Mileage Rate 2026: The Rates, the Mid-Year Increase, and the Math

The IRS set the original 2026 rates in Notice 2026-10: 72.5 cents per business mile, up 2.5 cents from the 70 cent rate in 2025. Of that 72.5 cents, 35 cents is treated as depreciation, a number that matters later when you sell the car, because standard-mileage users reduce their basis by the depreciation component for every business mile claimed.

Then gas prices moved. In July 2026 the IRS issued Announcement 2026-11, raising the business rate to 76 cents and the medical and moving rate to 23.5 cents for miles driven July 1 through December 31, 2026. The charitable rate stays at 14 cents because Congress fixed it in the statute; the IRS cannot adjust it.

A few definitional edges worth knowing. The business rate covers gas, oil, repairs, insurance, registration, and depreciation in one number; you cannot stack those costs on top of it, though parking fees and tolls for business trips are deductible in addition to the rate. The medical rate applies to driving for medical care that qualifies for the medical expense deduction. The moving rate is limited to active-duty military members moving under orders; for everyone else, moving expenses remain nondeductible.

Filing a late or amended return, reconstructing a prior-year reimbursement policy, or checking an old log against the right rate? Use the rate for the year, and in 2022 and 2026, the half-year, in which the miles were actually driven.

The pattern in the table is worth reading. The rate is not a political number; it tracks a yearly study of what cars actually cost to run. It fell in 2021 when fuel was cheap, jumped mid-2022 when fuel spiked, and has climbed since as vehicle prices, insurance, and financing costs rose. The two mid-year increases, 2022 and 2026, both followed rapid fuel inflation.

The math is deliberately simple: deductible miles times the applicable rate. The part people get wrong in 2026 is using one rate for the whole year. Run your first-half miles at 72.5 cents and your second-half miles at 76 cents, then add them.

The standard mileage rate is a substitute for tracking actual vehicle costs. Instead of deducting the business-use share of gas, insurance, repairs, and depreciation, you deduct one flat rate per business mile. Simpler recordkeeping, and for high-mileage drivers in modest cars, often a bigger deduction than the actual costs would produce.

But the election has teeth. To use the standard rate on a car you own, you must choose it in the first year the car is available for business use; after that you can switch between methods year by year (with straight-line depreciation required in actual-expense years). Skip it in year one and the standard rate is gone for that car, permanently. Lease a car and elect the standard rate, and you must use it for the entire lease term. Run five or more vehicles in the business at the same time and the standard rate is off the table entirely.

The biggest one-way fork: depreciation. Claim Section 179, bonus depreciation, or regular MACRS depreciation on a vehicle and you can never use the standard mileage rate on that vehicle again. That matters most for heavy vehicles: the big first-year write-off on a 6,000-pound-plus SUV, covered in our vehicles over 6,000 pounds guide, permanently locks that vehicle into the actual expense method. Accelerating the deduction and keeping the mileage option are mutually exclusive; pick deliberately in year one.

The full decision framework, including how depreciation recapture and business-use percentage interact with each method, lives in our business vehicle deduction guide. The short version: run both methods in year one, because year one is when the choice is made for the life of the vehicle.

If you are a W-2 employee, the hard truth is that work mileage is generally not deductible on your return. The deduction for unreimbursed employee expenses was suspended in 2018, and the One Big Beautiful Bill Act made that suspension permanent. Commuting between home and your regular workplace was never deductible for anyone. A W-2 employee who drives for work has exactly one good move: get the employer to reimburse it.

Employer reimbursement runs through accountable plan rules. If the employee substantiates the business miles (date, place, purpose) within a reasonable time, returns any excess advance, and the reimbursement rate does not exceed the IRS standard rate, the payment is completely tax-free: no income tax, no payroll tax, no W-2 reporting, and the employer deducts it. Pay more than the IRS rate and only the excess becomes taxable wages. Pay a flat car allowance with no mileage substantiation and the entire allowance is taxable wages, which is the most common employer mistake we see.

For business owners the same logic applies to your own entity. An S corporation owner should not deduct mileage on a personal return; the corporation should reimburse the owner-employee at the standard rate under an accountable plan, which moves the deduction onto the business return and keeps the reimbursement out of the owner's W-2 income.

Vehicle deductions live under Section 274(d), the strict substantiation rule. For each business trip you need the date, the destination, the business purpose, and the miles. You also need total annual miles, which is why smart taxpayers photograph the odometer every January 1. Under 274(d) the IRS does not have to accept a reasonable estimate; a deduction without contemporaneous records can be denied in full even when the driving obviously happened.

In a split-rate year the log carries one extra requirement: a subtotal of business miles driven through June 30, 2026 and a subtotal from July 1 on. Mileage apps handle this automatically. Paper logs need a line drawn at mid-year.

1. Round numbers and reconstructed logs.

A return claiming exactly 20,000 business miles reads like a guess, because it usually is one. Round-number mileage on a Schedule C with thin income is a well-known audit profile, and under the strict substantiation rules a reconstructed log rarely holds. Real logs produce numbers like 17,384.

2. Counting commuting as business miles.

Home to your regular workplace is commuting, full stop. The main exception is a qualifying home office: when your home is your principal place of business, trips from home to clients, job sites, or a second work location generally become business miles. That makes the home office deduction and the mileage deduction interlocking pieces, and worth planning together.

3. Forgetting the depreciation hiding inside the rate.

Every standard-rate business mile in 2026 reduces the car's tax basis by 35 cents. Claim 15,000 business miles a year for five years and you have quietly depreciated the car by roughly $26,000. Sell it for more than the reduced basis and the difference is taxable gain. The rate is not free money; part of it is depreciation you will account for at sale.

4. Using one 2026 rate for the whole year.

A full-year log priced entirely at 76 cents overstates the deduction; priced entirely at 72.5 cents it understates it. Two subtotals, two rates, one correct answer.