The Internal Revenue Service (IRS) has officially announced the 2026 standard mileage rates, and there are some important shifts that business owners, freelancers, and mobile workers need to track.
Whether you’re driving for business, medical reasons, or charitable service, these updated rates determine how much you can deduct from your taxes or how much you should be reimbursed by your employer.
Here is a breakdown of the new rates effective January 1, 2026.
The 2026 IRS Mileage Rates at a Glance
The biggest headline for 2026 is the 2.5-cent increase for business travel, bringing the rate to an all-time high to reflect rising vehicle costs and inflation.
- Business Use: 72.5 cents per mile (Up from 70 cents in 2025)
- Medical Purposes: 22.5 cents per mile (Down 0.5 cents)
- Moving (Military/Intel only): 22.5 cents per mile (Down 0.5 cents)
- Charitable Service: 14 cents per mile (Statutory rate; no change)
Key Takeaways for Taxpayers
1. EV and Hybrid Drivers are Included
It doesn’t matter what is in your tank (or battery). These rates apply to fully electric, hybrid, gasoline, and diesel-powered vehicles. If you’ve recently made the switch to an EV, you can still claim the full 72.5 cents per business mile.
2. New Eligibility for Moving Deductions
While moving expense deductions remain restricted to active-duty members of the Armed Forces, the new “One, Big, Beautiful Bill” has expanded this eligibility to include certain members of the intelligence community relocating under permanent change of station orders.
3. The “First Year” Rule for Business Owners
If you want to use the standard mileage rate for a vehicle you own, you must choose to use it in the very first year the car is used for business. If you use the “actual expenses” method in year one, you are generally locked out of using the standard rate for that vehicle in the future.
4. Employee Reimbursement vs. Deductions
Remember, most W-2 employees can no longer claim a federal tax deduction for unreimbursed employee travel expenses. However, these rates are still the gold standard for employer reimbursement programs. If your employer pays you 72.5 cents per mile, that reimbursement is generally tax-free.
How to Track Your Mileage for Maximum Savings
To stay compliant with the IRS, you must keep a precise log of your driving. Your records should include:
- The date of the trip.
- The total mileage.
- The destination and the business purpose of the travel.
The Bottom Line
With the business rate climbing to 72.5 cents, your tax savings can add up quickly. A consultant driving 10,000 miles for work in 2026 could see a deduction of $7,250.
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