The IRS has released Notice 2026-10 with the new standard mileage rates that take effect January 1, 2026. Here is what every business owner, finance team, and self-employed driver needs to know to apply the rates correctly and stay audit-ready.
Key Takeaways
- The 2026 business mileage rate is 72.5¢ per mile, up 2.5¢ from 2025. The new rates apply to miles driven on or after January 1, 2026.
- Medical and active-duty military moving rates drop to 20.5¢. Charitable stays at 14¢ by statute.
- W-2 employees generally cannot deduct unreimbursed business mileage. The TCJA suspension was made permanent by OBBBA in 2025.
- Your first-year election (standard rate vs. actual expenses) locks in the method for that vehicle. Choose carefully.
The IRS published Notice 2026-10 in late December 2025, setting the optional standard mileage rates that businesses and individuals use to calculate deductions or reimbursements for vehicle use. If you are a small-business owner, a finance team approving expense reports, or a self-employed contractor, these are the numbers that will shape your 2026 mileage expenses and tax returns.
This guide covers the new rates, who qualifies for each, how to stay audit-ready, and the handful of rules that trip up finance teams every year.
2026 Rates at a Glance, and How They Compare to 2025
Three of the four categories moved this year Business went up, medical and military moving went down, and charitable stayed flat because it is set by statute rather than adjusted for inflation. Here is the side-by-side view.
| Purpose | 2025 Rate | 2026 Rate | Change |
|---|---|---|---|
| Business use | 70.0¢/mi | 72.5¢/mi | +2.5¢ |
| Medical care | 21.0¢/mi | 20.5¢/mi | −0.5¢ |
| Moving (active-duty Armed Forces) | 21.0¢/mi | 20.5¢/mi | −0.5¢ |
| Charitable service | 14.0¢/mi | 14.0¢/mi | No change |
The 2026 rates apply to miles driven on or after January 1, 2026. Miles driven in late 2025 still use the 2025 rates, even if you are logging or reimbursing them in 2026.
Which Miles Count as Business
Your business miles generally start when you are driving from one work location to another for business, not when you are driving from home to your regular workplace. That distinction is the single most common reason mileage claims get disallowed in an audit.
Qualifying business miles typically include:
- Travel between two work locations on the same day
- Driving to meet a client, vendor, or customer
- Running job-related errands (bank runs, post office, supply pickups)
- Driving to a temporary work site outside your usual metro area
Commuting from home to your regular office does not qualify, even if you work during the drive or take client calls in the car.
A real-estate agent drives 10,000 qualifying business miles in 2026. Using the standard rate: 10,000 × $0.725 = $7,250 deduction. If they used the vehicle 80% for business and 20% personal, only the business share counts.
Reimbursement vs. Tax Deduction
The 72.5¢ IRS rate is a tax standard, not a universal reimbursement benchmark. The difference matters depending on who is behind the wheel.
If you own the business
As a sole proprietor, partner, S-corp owner, or LLC member driving for business, you can typically deduct business mileage on your return using either the standard rate or actual expenses.
If you are a W-2 employee
Under the 2017 Tax Cuts and Jobs Act (TCJA), unreimbursed employee business expenses were suspended through 2025. In 2025, the One Big Beautiful Bill Act (OBBBA) made that suspension permanent. In plain terms: most W-2 employees cannot deduct unreimbursed business mileage on their personal return in 2026 or later.
The practical fix is for employers to reimburse business driving through an accountable plan. Reimbursements up to the IRS rate are tax-free to the employee and deductible to the business.
Several states, including California, Illinois, and Massachusetts, require employers to reimburse employees for necessary business expenses (including mileage) regardless of federal rules. Check your state labor laws before setting a reimbursement policy.
Can You Use the Standard Rate?
The standard mileage rate is a bundled figure that covers gas, oil, maintenance, tires, insurance, registration, lease payments, and depreciation. You cannot claim those separately when you use the standard rate.
The critical rule: the first year you use a vehicle for business, you choose between the standard rate and actual expenses. If you pick actual expenses in year one, you are locked out of the standard rate for that vehicle in future years.
If you claimed actual expenses on a vehicle in 2025 (or any prior year), you cannot switch to the standard rate on that same vehicle in 2026. If you started with the standard rate, you can switch to actual expenses later, but you lose access to accelerated depreciation.
Build an Audit-Ready Mileage Policy
Whether you are claiming the deduction yourself or reimbursing a team, the IRS expects the same four fields on every trip log:
- Date of the trip
- Start and end locations (addresses or recognizable landmarks)
- Business purpose (a specific reason, not just "work")
- Miles driven for that trip
Weekly submission is realistic and keeps logs accurate. Monthly is acceptable but memory fades. A same-day app entry (MileIQ, Everlance, TripLog, QuickBooks Mileage) is the gold standard and the easiest way to survive an audit.
Setting up a compliant mileage reimbursement policy for your team?
Talk to a Tax Expert →Depreciation Baked Into the 2026 Rate
The standard mileage rate is not all fuel and wear. A portion of it is treated as depreciation that reduces your vehicle's tax basis, even if you never break it out in your books.
| Tax Year | Business Rate | Depreciation Portion |
|---|---|---|
| 2024 | 67.0¢/mi | 30.0¢/mi |
| 2025 | 70.0¢/mi | 33.0¢/mi |
| 2026 | 72.5¢/mi | 35.0¢/mi |
Edge Cases Finance Teams Trip Over
- Multiple vehicles. You can use the standard rate on up to four vehicles you own or lease at the same time, but each vehicle tracks its own method.
- Mixed business and personal trips. Only the business portion qualifies. Log the split.
- Irregular work locations. If you do not have a regular office, the rules get nuanced. Get advice before claiming home-to-site miles.
- Incomplete logs. A reconstructed log after the fact is weaker than a contemporaneous one. The IRS knows the difference.
- Reimbursing above the IRS rate. Anything over 72.5¢/mile becomes taxable wages for the employee.
Frequently Asked Questions
What is the IRS mileage rate for 2026 for business use?
When do the 2026 mileage rates take effect?
Can I still deduct business mileage as a W-2 employee in 2026?
Can I use the IRS mileage rate for employee reimbursement?
What counts as business mileage under IRS rules in 2026?
Should I choose the standard mileage rate or actual expenses in 2026?
Do I need a mileage log to claim the 2026 mileage rate?
Wrapping Up
The 2026 standard mileage rates are now set, and the headline numbers are simple enough: 72.5¢ for business, 20.5¢ for medical and military moving, and 14¢ for charitable service. The hard part is everything around them, including the first-year election, the log discipline, and the reimbursement rules. Get those right and the deduction takes care of itself.
Need help setting a compliant mileage policy or maximizing your 2026 deduction?
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