IRS Sets 2026 Business Mileage Rate at 72.5 Cents Per Mile
- Alexey Ravin
- Jan 1
- 3 min read
What Business Owners Need to Know (2026 Guide)
The IRS has officially announced the standard mileage rates for 2026, and there’s important news for business owners.
Starting January 1, 2026, the business mileage rate increases to 72.5 cents per mile, up 2.5 cents from 2025.
This change directly affects self-employed individuals, business owners, and anyone deducting vehicle expenses.
2026 IRS Standard Mileage Rates (At a Glance)
For mileage driven on or after January 1, 2026:
72.5¢ per mile — business use (⬆️ +2.5¢)
20.5¢ per mile — medical purposes (⬇️ −0.5¢)
20.5¢ per mile — moving purposes(only for active-duty military and certain intelligence community members)
14¢ per mile — charitable purposes (unchanged)
These rates apply to:
Gasoline vehicles
Diesel vehicles
Hybrid vehicles
Fully electric vehicles
What the Business Mileage Rate Means for Taxpayers
The standard mileage rate is an optional method used to calculate the deductible cost of operating a vehicle for business purposes.
For many taxpayers, this method is:
Simpler than tracking actual expenses
Easier to document
Often more favorable for high-mileage drivers
📌 The increase means larger deductions per mile in 2026.
Who Can Benefit from the 72.5¢ Business Rate?
You may benefit if you:
Are self-employed (Schedule C)
Own an LLC or S-Corporation
Use your personal vehicle for business
Drive frequently for work (clients, job sites, meetings)
Track mileage consistently
Even a small increase per mile can add up to thousands of dollars over a year.
Standard Mileage vs Actual Expenses: Which Is Better?
Using the standard mileage rate is optional.
You can choose between:
Standard mileage method
Actual expense method (gas, insurance, repairs, depreciation, etc.)
However, there are important rules:
🚗 Owned Vehicles
If you want to use the standard mileage rate, you must choose it the first year the vehicle is used for business.
In later years, you may switch between methods (with limitations).
🚗 Leased Vehicles
If you choose the standard mileage rate, you must use it for the entire lease period, including renewals.
📌 Choosing the wrong method at the wrong time can limit deductions later.
Important Limitations to Know
Unreimbursed employee mileage is generally not deductible (with limited exceptions).
Moving mileage deductions apply only to:
Active-duty military
Certain intelligence community members (expanded under the One Big Beautiful Bill)
Charitable mileage remains fixed by law and does not adjust for inflation.
Why Mileage Strategy Matters More Than Ever
Mileage deductions are not just about tracking miles.
They are connected to:
Entity structure (Schedule C vs S-Corp)
Accountable plans
Reimbursements
Overall tax planning strategy
📌 The mileage rate is a tool — strategy determines the result.
Final Thoughts
The IRS mileage increase for 2026 is good news for business owners — but only if used correctly.
The key questions are:
Are you tracking mileage properly?
Are you using the right deduction method?
Does your business structure support your mileage strategy?
📌 Need Help Maximizing Vehicle Deductions?
At Bellagio Prime Tax, our IRS-licensed Enrolled Agents help business owners:
Choose the correct mileage method
Avoid common deduction mistakes
Integrate vehicle expenses into a full tax strategy
👉 Schedule a tax strategy consultation to see how the new 2026 mileage rate affects you.
Disclaimer
This article is for informational purposes only and does not constitute tax advice.Tax deductions depend on individual facts and circumstances. Consult an Enrolled Agent for guidance specific to your situation.
Source:
IRS Newsroom – IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile
Comments