If you use your vehicle for work, here’s some good news: the IRS just bumped up the standard mileage rate for 2026, and it could mean a bigger deduction when tax time rolls around.
Starting January 1, 2026, the business driving rate is 72.5 cents per mile — up 2.5 cents from last year’s 70 cents. It’s not a massive jump, but for business owners, contractors, and self-employed folks who put serious miles on their vehicles, those extra cents add up faster than you might think.
At CPA Nerds, we work with many clients across Metro Detroit who drive for work and don’t realize how much they’re leaving on the table by not properly tracking their mileage. Whether you’re making client visits, running job sites, or delivering services across Macomb and Oakland Counties, this deduction is one of the simplest ways to reduce your tax bill.
What the Standard Mileage Rate Is
The standard mileage rate is a simplified way to calculate the cost of using your vehicle for business purposes. Instead of tracking every vehicle expense, such as fuel, maintenance, repairs, insurance, and depreciation, you can multiply your total business miles by the IRS mileage rate.
For 2026, each qualifying business mile is worth 72.5 cents. For example, if you drive 10,000 miles for business during the year, the deduction using the standard mileage method would be $7,250.
The IRS reviews national vehicle cost data each year when setting this rate. Fuel costs, insurance, maintenance, and depreciation all influence the annual adjustment.
Other IRS Mileage Rates for 2026
The IRS also publishes mileage rates for other types of driving. For 2026, the rates are:
- Business travel: 72.5 cents per mile
- Medical travel: 20.5 cents per mile
- Moving expenses for qualified active-duty military members: 20.5 cents per mile
- Charitable service: 14 cents per mile
The charitable mileage rate remains the same because it is set by federal law rather than adjusted annually by the IRS.
Who Can Use the Standard Mileage Deduction
The standard mileage rate is commonly used by:
- Small business owners
- Self-employed professionals
- Independent contractors
- Gig workers and freelancers
It applies to cars, vans, pickup trucks, and panel trucks used for business driving. The deduction also applies regardless of whether the vehicle is gasoline, diesel, hybrid, or fully electric.
One important requirement is keeping accurate records. The IRS expects taxpayers to track their business mileage, including the date, destination, trip purpose, and miles driven. A simple mileage log or mileage tracking app can make this much easier.
Standard Mileage vs. Actual Vehicle Expenses
Taxpayers typically have two options when deducting vehicle costs. The standard mileage rate method multiplies business miles by the IRS rate and is usually the simplest option.
The other approach is the actual expense method, which allows you to deduct real costs such as gas, insurance, repairs, maintenance, and depreciation.
Depending on the vehicle and how often it is used for business, one method may provide a larger deduction than the other. Choosing the right option often requires a closer look at your records.
Need Help Tracking or Claiming Mileage Deductions?
Vehicle deductions are among the most common ways for business owners to reduce their tax bills. They are also one of the areas where poor recordkeeping can create problems during an audit.
If you use your vehicle for business and want to make sure you are claiming the right deductions, CPA Nerds can help. Our team works with business owners, freelancers, and contractors to make tax planning simpler and more effective.
Reach out to CPA Nerds today to review your situation and make sure you are getting the most from your business mileage deductions.
Leave a Reply