Attention drivers, the 2026 standard mileage rates are out. The IRS just announced the updated rates, which are used for determining the deduction for the costs of operating a vehicle for various business, charitable, moving, or medical reasons.

Why It Matters

The standard mileage rate directly affects how much taxpayers and businesses can deduct (or be reimbursed for) vehicle use. Even small changes can have a meaningful impact over the course of a year, particularly for business owners, self-employed individuals, and employees who drive frequently for work. Understanding whether the standard mileage rate or actual expense method yields the greater tax benefit can help maximize deductions and improve cash flow.

In addition, employers that reimburse employees using mileage-based allowances should review these updated rates to ensure their reimbursement policies remain compliant and tax-efficient.

What are the changes for 2026?

Beginning January 1, 2026, the standard mileage rates for the use of a car, van, pickup, or panel truck are:

• 72.5 cents per mile driven for business use, up 2.5 cents from 70 cents per mile in 2025.
• 20.5 cents per mile driven for medical purposes, down a half cent from 2025.
• 20.5 cents per mile driven for moving purposes for certain active-duty members of the Armed Forces (and now certain members of the intelligence community), also down a half cent from 2025.
• 14 cents per mile driven in service of charitable organizations, unchanged from 2025.

These rates apply to gasoline, diesel, hybrid, and fully electric vehicles.

How are the rates calculated?

There are various factors that influence the standard mileage rates, including:

• Gas and oil prices
• Insurance costs
• The state of the economy
• Maintenance and repairs
• Vehicle depreciation and general wear and tear

While the charitable mileage rate is set by statute, the business mileage rate reflects both fixed and variable vehicle costs. The medical and moving rates, however, are based solely on variable costs.

Is the standard mileage rate the only way to gauge deductions?

No, taxpayers always have the option to claim deductions based on the actual costs of using a vehicle, as an alternative to using the standard mileage rates.

However, special rules apply:

• For owned vehicles, taxpayers must choose the standard mileage rate in the first year the vehicle is placed in service for business use if they want the option to use it later.
• For leased vehicles, the standard mileage rate must be used for the entire lease period, including renewals.

The new rates are effective as of January 1, 2026.