What’s Changed
As of January 1, 2026, the IRS raised the standard mileage rate for business use of a vehicle to 72.5 cents per mile, up by 2.5 cents from 2025. Medical and moving-related use rates decreased slightly, while the charitable mileage rate remains unchanged. (irs.gov)
Who Benefits Most
- Self-employed professionals, gig-economy workers, and consultants who use their personal vehicle for work
- Remote workers who travel among client sites or attend multiple workplaces in a single day
- Delivery drivers and those in logistics for whom travel makes up a large portion of lead cost
Actionable Tips to Maximize Savings
- Keep detailed logs: Time, date, business purpose, starting and ending odometer readings. The IRS expects documentation even when using standard mileage.
- Choose standard vs. actual-cost method wisely: The standard rate may be simpler and often more beneficial, but if your vehicle has high maintenance, insurance, or depreciation costs, actual expenses might yield more deductions.
- Separate personal from business use: To avoid audits or disallowances, make sure only business miles are deducted.
- Reimburse employees correctly: If you reimburse employees, adhering to IRS rate helps avoid fringe benefit issues.
Examples in Practice
- A consultant drives 10,000 business miles annually. At 72.5¢/mile, that equals $7,250 in potential deductions.
- A self-employed carpenter doing 5,000 business miles can deduct $3,625, helping offset costs of fuel, wear-and-tear, and insurance.
Pro Tips for Compliance
- Store mileage logs and receipts for at least three years—but longer if substantial deductions or prior audits.
- Use mileage-tracking apps or features in business accounting software to simplify record keeping.
- If switching from actual-expense method to standard, ensure you follow IRS rules: first year method choice may affect depreciation calculation.
- When selling a vehicle previously used under actual-cost deductions, there might be recapture implications; always check with a tax advisor.
Bottom Line
Use the higher rate wisely, document everything, and assess your situation annually. For many, the increase is a real dollar-for-dollar opportunity to reduce taxable income—especially if you drive for business often. But if your costs are especially high, the actual-expense method might still be worth exploring.