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)
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)
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
- Track mileage meticulously. Use apps or spreadsheets. You'll need to separate business from medical/moving/charitable trips.
- 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)
- Consider actual expenses if favorable. If you have high costs (fuel, insurance, repairs), that method may yield greater deductions — but more recordkeeping.
- Review your reimbursements. Employers offering allowances should match or exceed standard rates to avoid undercompensating employees.
- 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.