The IRS released Notice 2026-10 in late December 2025, setting the 2026 business standard mileage rate at 72.5 cents per mile — a 2.5-cent increase from 2025's 70-cent rate. The new rates take effect January 1, 2026, and apply to every business mile driven during the 2026 tax year, whether deducted on Schedule C, Form 2106, or reimbursed by an employer under an accountable plan.

For the millions of self-employed filers, freelancers, rideshare drivers, and contractors who track business mileage, the increase means a meaningfully larger deduction in 2026. A freelancer logging 20,000 business miles next year will deduct $14,500 using the standard rate, versus $14,000 at the 2025 rate — an extra $500 in deductible expenses that translates to roughly $150 in tax savings at a 30% combined federal and self-employment tax rate.

"Beginning on January 1, 2026, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be 72.5 cents per mile driven for business use, up 2.5 cents from 2025." — IRS Notice 2026-10

The Four 2026 Mileage Rates

Notice 2026-10 publishes four separate rates, each tied to a different deduction category. Here's the full breakdown with 2025 comparisons:

Business use: 72.5 cents per mile (up from 70 cents in 2025, a 2.5-cent increase)
Medical travel: 20.5 cents per mile (down from 21 cents in 2025, a 0.5-cent decrease)
Moving (active-duty military only): 20.5 cents per mile (down from 21 cents in 2025)
Charitable service: 14 cents per mile (unchanged — fixed by statute)

The business rate also includes a depreciation component of 35 cents per mile for 2026, up from 33 cents in 2025. That component matters when you later sell the vehicle — it reduces your basis and increases any taxable gain on disposal. The IRS recalculates the business and medical rates annually based on fixed and variable vehicle operating costs, including fuel, insurance, maintenance, and depreciation.

Who Benefits Most From the Increase

The 2.5-cent bump sounds small on a per-mile basis, but it compounds quickly for anyone who drives heavily for work. The biggest winners from the 2026 increase:

Rideshare and delivery drivers — Full-time Uber, Lyft, DoorDash, and Instacart drivers routinely log 30,000 to 50,000 business miles annually. At 50,000 miles, the rate hike adds $1,250 in deductions.
Outside sales reps and real estate agents — Territory sales and residential real estate both involve constant driving between clients, listings, and showings. 25,000 miles of territory coverage nets an extra $625 deduction.
Contractors and tradespeople — Plumbers, electricians, HVAC techs, and general contractors driving between job sites with personal vehicles (not company vans) benefit directly.
Freelancers with client travel — Consultants, photographers, and service professionals who drive to client meetings or gigs.
Small business owners — Anyone using a personal vehicle for business errands, supply runs, bank trips, and client visits.

The math is straightforward: multiply your extra business miles above prior-year levels by $0.025, and you've got your incremental deduction from the rate change alone.

Standard Mileage vs. Actual Expense Method

The standard mileage rate is one of two methods the IRS allows for deducting vehicle costs. The alternative is the actual expense method, which requires tracking every dollar spent on fuel, oil, repairs, tires, insurance, registration, lease payments, and depreciation — then deducting the business-use percentage of the total.

Standard mileage wins on simplicity. Actual expense often wins on dollar amount, especially for expensive vehicles, heavy-wear operations, or electric vehicles with steep depreciation schedules. A Tesla Model Y driven 15,000 business miles per year often produces a larger deduction under actual expense than the $10,875 standard mileage calculation, once depreciation and charging costs are included.

One critical rule that trips up filers every year: if you want the flexibility to use the standard mileage rate, you must use it in the first year the vehicle is placed in service for business. You can switch from standard mileage to actual expense in later years (with some depreciation recapture calculations), but switching the other direction — from actual expense to standard mileage — is restricted or prohibited for vehicles where you've already claimed MACRS depreciation or Section 179 expensing. Choose carefully in year one.

What the IRS Requires for Mileage Tracking

The IRS requires a contemporaneous mileage log — meaning records kept at or near the time of each trip, not reconstructed at year-end. Every business mileage deduction must be supported by documentation showing:

Date of the trip
Destination (address or identifiable location)
Business purpose (client name, meeting type, errand description)
Miles driven

Dedicated mileage apps — MileIQ, Everlance, Stride, and the QuickBooks Self-Employed mileage tracker — automatically capture trips via GPS and let you classify them as business or personal with a swipe. Used consistently, these apps produce audit-ready logs that easily survive IRS scrutiny. Spreadsheets work too, but only if you update them weekly at minimum.

Year-end reconstructions, where filers estimate their annual mileage based on odometer readings and "typical weeks," are routinely rejected in audits. Tax Court cases consistently disallow mileage deductions that aren't backed by contemporaneous records, regardless of how reasonable the estimate appears.

Why the Charitable Rate Is Stuck at 14 Cents

The charitable mileage rate has sat at 14 cents per mile since 2011 — fourteen straight years without a change — while the business rate has climbed from 51 cents to 72.5 cents over the same period. The reason: unlike the business and medical rates, which the IRS updates administratively based on vehicle cost data, the charitable rate is fixed by statute under Internal Revenue Code Section 170(i). Only Congress can change it.

Bills to raise or index the charitable rate to inflation have been introduced in multiple sessions but haven't passed. Volunteers driving for Meals on Wheels, disaster relief organizations, youth sports programs, and other qualified charities continue to deduct at the 14-cent rate — well below what it actually costs to operate a vehicle. For nonprofits dependent on volunteer drivers, the stagnant rate has become a recruiting and retention challenge.

What This Means for Your 2026 Taxes

Three action items for anyone deducting vehicle expenses in 2026:

Start tracking from January 1. The new rates apply to every mile driven on or after January 1, 2026. Miles driven in 2025 use the 70-cent rate even if they're deducted on a return filed in 2026.
Decide method per vehicle. If your business uses multiple vehicles, you can pick standard mileage for some and actual expense for others. Run the numbers for each vehicle individually — expensive SUVs and EVs often favor actual expense, while older paid-off sedans usually favor standard mileage.
Pay attention if you're near a deduction threshold. The 2.5-cent increase can push an otherwise-borderline deduction into a range where itemizing, electing bonus depreciation, or meeting a specific tax credit threshold becomes worthwhile.

For firms with mixed-use vehicles and complex tracking setups, the method you choose in year one of a new vehicle's service date is essentially locked in for the useful life of that asset. Getting the decision right the first time is worth an hour of planning with your bookkeeper or tax preparer before the vehicle goes into service.

Need help picking between standard mileage and actual expense, setting up a mileage tracking system, or projecting your 2026 Schedule C deduction? Get a free bookkeeping quote or explore our tax prep services built for self-employed filers, contractors, and small business owners.

IRS Sets 2026 Business Mileage Rate at 72.5 Cents Per Mile, Up 2.5 Cents