The Internal Revenue Services (IRS) just announced that the standard mileage rate for business driving will be increasing in 2026—a change that will help millions of Americans fight inflation. To learn more about the change, including how you can benefit in the new year, keep scrolling.
What we know about the new standard mileage rate for business driving
On Monday, December 29, the IRS issued a press release announcing that, starting on January 1, the standard mileage rate—something the IRS uses to calculate the deductible costs for self-employed individuals operating a vehicle for work—will be increasing. By doing so, they are making it easier for people who use a car, van, pickup or panel truck to receive a tax break for 2026.
Who can benefit? People who use their own vehicle for work, medical purposes or for volunteering with charitable organizations, as well as certain active-duty members of the Armed Forces who use their car to move and for some members of the intelligence community.
Here’s the mileage rate drivers are looking at in 2026:
- 72.5 cents per mile driven for business use, up 2.5 cents from 2025.
- 20.5 cents per mile driven for medical purposes, down a half cent from 2025.
- 20.5 cents per mile driven for moving purposes for certain active-duty members of the armed forces and now certain members of the intelligence community, reduced by a half cent from 2025.
- 14 cents per mile driven in service of charitable organizations, equal to the rate in 2023.
“While the mileage rate for charitable use is set by statute, the mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes, meanwhile, is based on only the variable costs from the annual study,” according to the IRS. “Use of the standard mileage rates is optional. Taxpayers may instead choose to calculate the actual costs of using their vehicle.”
How to claim the new standard mileage rate for business driving
To claim the new standard mileage rate for business driving, all self-employed individuals have to do is track their business miles, by writing down their travel dates, starting and ending destinations, the purpose of each trip and odometer readings at the start and end of each trip. From there, they can multiply their total business miles for the year by the standard mileage rate for that year and then report it under line 9 of Schedule C (Form 1040) on their tax returns.
For W-2 employees that process is different, since, due to the Tax Cuts and Jobs Act of 2017, they cannot claim any tax breaks on business travel. They instead can get reimbursed through their employer or apply for commuter benefits, which can be done with the help of a company’s human resources department.
Other car tax breaks happening in 2026
Along with the increase in the standard mileage rate for business driving, the United States government is also initiating a “No Tax on Car Loan Interest” provision in 2026. This program—part of the One Big Beautiful Bill Act—allows car owners to deduct any interest they pay on a car loan, as long as the car is bought for personal use and meets other criteria set by the government (this deduction doesn’t apply to car lease payments).
The maximum annual deduction for this provision is $10,000, and for taxpayers with a modified adjusted gross income over $100,000 the deduction phases out, meaning that people with that income will not qualify.
To qualify, your car must be only for personal use and your loan has to have been taken out after December 31, 2024. For more on this program, and to see if you qualify for it, click here.
