Tax Planning
Mileage Math 2026: How IRS’s New Standard Rates Impact Freelancers and Remote Workers
With the IRS increasing its 2026 standard mileage rate, remote workers and self-employed people must adjust expense tracking and deductions to ensure they maximize benefits without violating rules.
By NomadicTax Research Team • 5-8 min read • May 1, 2026
## What’s Changing
Starting **January 1, 2026**, the IRS updated the standard mileage rates by issuing **Notice 2026-10**. The **business mileage rate** rose to **72.5¢ per mile**, up from 70¢ in 2025. Conversely, the medical and moving rate dropped to 20.5¢ per mile from 21¢, while the **charitable** rate remains unchanged at 14¢. ([paylocity.com](https://www.paylocity.com/resources/tax-compliance/alerts/irs-releases-mileage-rates-for-2026/?utm_source=openai))
Crucially, the portion of the business rate attributed to **depreciation** is now 35¢ per mile — relevant if you later switch from the standard mileage method to actual expenses. ([legalclarity.org](https://legalclarity.org/what-are-the-current-irs-standard-mileage-rates/?utm_source=openai))
## Who’s Impacted?
- **Freelancers**, gig workers or telecommuters who log many business miles.
- **Digital nomads** or remote workers whose work requires regular travel between locations.
- **Employees using unreimbursed business mileage** (if applicable under employer policies or when itemizing).
- **Volunteer drivers** or non-profit sector workers for the charitable rate.
## Actionable Tips to Make the Most of the Update
1. **Track mileage meticulously.** Use apps or spreadsheets. You'll need to separate business from medical/moving/charitable trips.
2. **Calculate basis reduction for depreciation.** Every business mile claimed under the standard mileage rate lowers your vehicle’s cost basis by the depreciation portion (35¢). This affects future capital gains when you sell or trade in the vehicle. ([legalclarity.org](https://legalclarity.org/what-are-the-current-irs-standard-mileage-rates/?utm_source=openai))
3. **Consider actual expenses if favorable.** If you have high costs (fuel, insurance, repairs), that method may yield greater deductions — but more recordkeeping.
4. **Review your reimbursements.** Employers offering allowances should match or exceed standard rates to avoid undercompensating employees.
5. **Update your budget forecasts.** With business travel slightly more deductible and medical/moving less so, your tax bills or reimbursement strategies may need adjustment.
## Example Scenarios
- A remote worker drives 10,000 business miles in 2026: deduction = 10,000 × $0.725 = **$7,250**.
- A digital nomad with 5,000 medical/moving miles: 5,000 × $0.205 = **$1,025** deduction.
- Volunteer firefighter who drives 2,000 miles for charity: 2,000 × $0.14 = **$280** deduction.
## Pitfalls to Avoid
- Mixing personal and business miles without supporting logs can trigger audits.
- Failing to account for basis reduction if you switch from standard mileage to actual expenses.
- Overusing charitable miles beyond allowable purposes.
## Key Takeaway
These revised rates affect not only **how much** you deduct but **how you maintain records**, manage assets, and plan your travel expenses. Track carefully, choose wisely, and stay compliant — money “saved” in tax errors can cost more in the long run.