The IRS has released the inflation-adjusted 2026 mileage reimbursement rate, used to calculate deductible vehicle expenses for business, medical, charitable, and limited moving purposes.
Beginning on Jan. 1, 2026, the standard mileage rates for the use of a car (or a van, pickup or panel truck) are:
- 72.5 cents per mile for business use, up from 70 cents in 2025
- 20.5 cents per mile for medical and qualified moving purposes, down from 21 cents
- 14 cents per mile for charitable use, unchanged by law for over 25 years
The business mileage rate reflects both fixed and variable vehicle costs, including depreciation. Medical and moving rates are based on variable costs only, while the charitable rate is set by statute and can only be changed by Congress.
Contributing factors to the 2026 Mileage Reimbursement Rate
Moving Mileage Rules for 2026
Under the One Big Beautiful Bill Act (OBBBA), moving-related mileage deductions remain disallowed except for:
- Intelligence community members relocating due to a required change of assignment (for moves in 2026 or later)
- Active-duty Armed Forces members moving under military orders
Important Considerations for Business Use of a Vehicle
Taxpayers may choose between the standard mileage rate or the actual expense method. However, once the actual method (including Section 179 or bonus depreciation) is used for a vehicle, the standard mileage rate cannot be used for that same vehicle in future years.
Parking fees, tolls, and business-related vehicle property taxes may still be deducted in addition to the standard mileage rate, a commonly overlooked benefit.
Employer Reimbursement
Employer mileage reimbursements using the standard rate are tax-free when employees properly document the time, place, mileage, and business purpose of travel.
Employee, Self-Employed, and Educator Rules
Unreimbursed employee vehicle expenses remain nondeductible for most workers. Exceptions include:
- Certain Armed Forces reservists
- Fee-based government officials
- Performing artists
- Eligible educators, who may deduct qualified travel expenses as an adjustment to income, subject to limits
Self-employed taxpayers can continue to deduct business vehicle use on Schedule C and may also deduct the business portion of auto loan interest.
Faster Write-Offs for Heavy Sport Utility Vehicles (SUVs)
SUVs weighing over 6,000 pounds (but under 14,000 pounds) may qualify for Section 179 expensing (up to $32,000 in 2026) and bonus depreciation, allowing for larger first-year deductions. Early disposal of the vehicle may trigger depreciation recapture.
If you have questions related to the best methods of deducting the business use of your vehicle or the documentation required, please give this office a call.
Did you know? Here are the Tax Changes this Year