IRS Mileage Rate 2026: Complete Self-Employed Guide
The 2026 IRS business mileage rate is 72.5¢/mi. How to use it, who qualifies, what's new under OBBBA, and how to log miles to survive an audit.
EveryLastMile
If you drive your own car for work and you’re not a W-2 employee, the IRS mileage rate is one of the most valuable numbers on your tax return. For 2026, it’s 72.5 cents per mile — up 2.5 cents from 2025. On 15,000 business miles, that’s $10,875 off your taxable income before you’ve touched any other deduction.
This guide is built for the people who actually use that rate: rideshare and delivery drivers, real estate agents, freelancers, traveling consultants, and small business owners who file Schedule C. We’ll cover the rate itself, who qualifies, what counts as a business mile (and what definitely doesn’t), how to keep records the IRS will accept, and how 2026’s new tax law — the One Big Beautiful Bill Act — changes the picture. We’ll also walk through three real day-in-the-life scenarios with real dollar amounts.
Key takeaways
- The 2026 business mileage rate is 72.5¢ per mile (Notice 2026-10).
- W-2 employees can no longer deduct unreimbursed mileage. Self-employed taxpayers, Armed Forces reservists, fee-basis officials, qualified performing artists, and eligible educators still can.
- The standard rate covers gas, oil, repairs, insurance, registration, and depreciation. Parking, tolls, and the business portion of auto loan interest are deductible on top.
- You must keep a contemporaneous log — meaning records made “at or near the time” of each trip. Logs reconstructed during an audit are routinely thrown out by the Tax Court.
- Your mileage deduction reduces both income tax AND the 15.3% self-employment tax — combined savings are larger than most articles let on.
The 2026 IRS mileage rates at a glance
The IRS announced the 2026 rates in Notice 2026-10, released December 29, 2025. The rates apply to electric, hybrid-electric, gasoline, and diesel cars, vans, pickups, and panel trucks. They’re effective for miles driven on or after January 1, 2026.
| Purpose | 2026 Rate | Change from 2025 |
|---|---|---|
| Business use | 72.5¢ / mile | up 2.5¢ |
| Medical care | 20.5¢ / mile | down 0.5¢ |
| Moving (Armed Forces only) | 20.5¢ / mile | down 0.5¢ |
| Charitable service | 14¢ / mile | unchanged (set by statute) |
How the 2026 business rate compares to recent years
The business rate has climbed steadily since 2021, reflecting rising fuel and vehicle costs. The mid-2022 jump was unusual — the IRS rarely changes rates mid-year, but did so in response to a spike in gas prices.
| Year | Business Rate |
|---|---|
| 2026 | 72.5¢ |
| 2025 | 70¢ |
| 2024 | 67¢ |
| 2023 | 65.5¢ |
| July–Dec 2022 | 62.5¢ |
| Jan–June 2022 | 58.5¢ |
| 2021 | 56¢ |
| 2020 | 57.5¢ |
The 35-cent depreciation portion almost nobody mentions
Inside that 72.5¢ rate, the IRS treats 35¢ per mile as depreciation in 2026 (up from 33¢ in 2025). You don’t see this on Schedule C — it’s the same total deduction either way. But it matters in one specific situation: when you sell or trade in the vehicle.
Every business mile you claim reduces your vehicle’s tax basis by the depreciation portion. If you drive 15,000 business miles in 2026, your basis drops by 15,000 × $0.35 = $5,250. When you eventually sell the car, any gain attributable to that accumulated depreciation is taxed as ordinary income under §1245 — not capital gains. Keep this in mind if you’ll sell a high-mileage business vehicle.
Federal mileage rate for 2025 (and how it differs from 2026)
If you’re filing a 2025 return — on extension, amending a prior year, or reconciling Q4 2025 estimated taxes — the federal mileage rate for 2025 is 70 cents per mile for business use, set by IRS Notice 2025-5 and effective for miles driven between January 1 and December 31, 2025. The 2026 rate of 72.5¢ applies only to miles driven on or after January 1, 2026.
The four 2025 rates side-by-side with 2026
| Purpose | 2025 Rate | 2026 Rate | Change |
|---|---|---|---|
| Business use | 70¢ / mi | 72.5¢ / mi | +2.5¢ (+3.57%) |
| Medical care | 21¢ / mi | 20.5¢ / mi | −0.5¢ (−2.38%) |
| Moving (active-duty military) | 21¢ / mi | 20.5¢ / mi | −0.5¢ (−2.38%) |
| Charitable service | 14¢ / mi | 14¢ / mi | unchanged (statutory) |
The thing most “2025 vs 2026” articles miss: the rates moved in opposite directions
Most year-over-year mileage stories announce “the IRS raised the rate” and move on. They missed the actual headline: the business rate went up while the medical and moving rates went down. That’s genuinely unusual — these rates typically track each other because they share underlying inputs.
They diverged this year because they use different cost baskets. The business rate is built from both fixed costs (insurance, depreciation, registration, loan financing) and variable costs (fuel, oil, tires, maintenance). The medical and moving rates use only variable costs — they exclude depreciation and insurance entirely under longstanding IRS methodology.
In 2025, average U.S. gasoline prices ran roughly 16 cents per gallon below 2024 levels (per the Motus annual cost study that drives these IRS calculations). That fuel drop pulled the variable-cost-only medical and moving rates down. But it was overwhelmed on the business side by sharp increases in vehicle acquisition costs (used and new car prices remained elevated), auto insurance premiums (which climbed double-digits in many state markets), and depreciation.
The 35¢ depreciation component inside the 2026 business rate is up 2¢ from the 33¢ embedded in 2025 — meaning roughly 80% of the entire 2.5¢ business rate increase is depreciation alone.
What the rate difference is worth to a full-time gig driver
For an 18,000-mile rideshare or delivery driver, the year-over-year rate change is straightforward:
| Year | Business miles | Rate | Deduction |
|---|---|---|---|
| 2025 | 18,000 | $0.70 | $12,600 |
| 2026 | 18,000 | $0.725 | $13,050 |
That’s a $450 larger paper deduction for the same driving in 2026. At a typical 22% marginal income tax bracket combined with 15.3% self-employment tax on the offset portion (~37.3% combined effective rate on Schedule C net profit), the actual cash savings difference is roughly $168 a year. Useful, but not enough to change how you plan — the bigger lever is still whether you’re tracking every business mile in the first place, not which year’s rate is in force.
The charitable rate hasn’t budged since the Clinton administration
While the business and medical rates re-set every December based on Motus’s cost study, the 14¢/mile charitable rate is frozen by statute under IRC §170(i). The IRS cannot raise it. Only Congress can — and Congress hasn’t touched it since 1997.
A volunteer driving to deliver meals for a 501(c)(3) deducts the same 14¢ per mile they would have deducted under the Clinton administration. Adjusted for inflation, the real value of that deduction has fallen by roughly 60% across that period. Several reform bills (the Volunteer Driver Tax Appreciation Act and predecessors) have proposed indexing the charitable rate to the business rate; none have passed.
A note for active-duty military: the moving rate’s narrow audience
The 21¢ (2025) and 20.5¢ (2026) “moving” rates apply only to active-duty members of the Armed Forces moving under permanent change of station orders. The Tax Cuts and Jobs Act of 2017 suspended the moving expense deduction for everyone else through tax year 2025, and Notice 2026-10 continues to apply the rate exclusively to active-duty service members for 2026.
If you’re a civilian — even a self-employed civilian moving for a new business location — you cannot deduct moving mileage on a 2025 or 2026 federal return. A handful of states have decoupled from the TCJA moving-expense suspension (California is the most prominent), so the moving deduction may still be available at the state level.
Filing for both 2025 and 2026? Apply each year’s rate by date
Mileage rates apply based on when the miles were driven, not when the tax return is filed. If you’re filing your 2025 return today (or amending one later), every business mile driven between January 1 and December 31, 2025 multiplies by $0.70. Miles driven on or after January 1, 2026 multiply by $0.725 — even if both years end up on returns you filed in the same calendar week.
For taxpayers on a non-calendar fiscal year, the same date-of-drive rule applies: split your business miles by calendar-year date ranges and apply each year’s rate to the miles driven during that period.
What changed for 2026 — and why it matters more than the rate
The 2.5-cent rate bump isn’t the biggest 2026 story for self-employed drivers. The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, made structural changes that affect almost every Schedule C filer.
W-2 employees can no longer deduct mileage
OBBBA §70110 permanently disallowed §67 miscellaneous itemized deductions, including unreimbursed employee travel. If you’re a W-2 employee using your own car for work, you cannot deduct that mileage in 2026, full stop. The narrow exceptions are: Armed Forces reservists, fee-basis state and local government officials, qualified performing artists, and eligible educators.
For self-employed people reading this, your deduction is unchanged. But if you have a W-2 day job and a Schedule C side business, only the Schedule C miles count.
The 1099-K threshold quietly reverted
Before OBBBA, the 1099-K reporting threshold was scheduled to phase down to $600. OBBBA §70432 reset it to the pre-2022 standard: $20,000 AND 200 transactions, retroactive to 2025. The IRS confirmed this in Fact Sheet 2025-08.
For rideshare and gig workers, this means platforms like Uber, Lyft, and DoorDash report your gross payments on a 1099-K only if you cross both thresholds. Your tax liability hasn’t changed — you owe tax on all your income whether or not you receive a form — but mileage tracking matters more than ever, because it’s the single biggest deduction reconciling your gross 1099-K to your net Schedule C profit.
A new $10,000 deduction for vehicle loan interest
OBBBA created a brand-new above-the-line deduction under §163(h)(4) for tax years 2025 through 2028: up to $10,000 per year of interest on a loan used to buy a new, U.S.-assembled personal vehicle under 14,000 lb GVWR. Income phase-outs begin at $100,000 modified AGI (single) and $200,000 (married filing jointly).
For self-employed taxpayers, IRS Notice 2025-57 spells out the catch: you must allocate the interest between business use (deductible on Schedule C as part of actual expenses, or on top of the standard rate as a separate business interest deduction) and personal use (deductible via the new §163(h)(4) on Schedule 1-A Part IV). You cannot double-dip. Lenders will issue a new Form 1098-VLI to track it.
Who can use the standard mileage rate
The standard mileage rate isn’t available to everyone who drives for work. To use it, you must own or lease the vehicle, and:
- You must not operate five or more vehicles simultaneously (the “fleet rule” — if you do, you must use actual expenses).
- You must not have claimed depreciation other than straight-line on the vehicle.
- You must not have used MACRS depreciation on it.
- You must not have claimed §179 expensing on it.
- You must not have claimed special or bonus depreciation on it.
- For leased vehicles, you must not have claimed actual expenses on it in any year after 1997.
These rules trace to IRS Topic No. 510 and Publication 463, Chapter 4.
The first-year election that locks in your future options
This is the single most important rule in the standard-vs-actual decision, and most articles bury it.
For a vehicle you own: You must choose the standard mileage rate in the first year the vehicle is available for business use. Pick standard in year one, and you can switch to actual in later years (with some restrictions on how you depreciate from that point forward). Pick actual in year one — especially if you claim MACRS depreciation, §179, or bonus depreciation — and you are permanently locked out of the standard mileage rate for that vehicle’s entire useful life.
For a leased vehicle: Whichever method you pick in year one must be used for the entire lease period, including renewals.
The practical implication: if you’re not sure which method is better, default to standard mileage in year one. It preserves your flexibility. Choosing actual locks doors that cannot be reopened.
What counts as a business mile (and what doesn’t)
The legal definition lives in Revenue Ruling 99-7, and it’s deceptively simple: travel between your home and your regular place of business is a nondeductible commute. Travel between business locations is deductible.
The interesting question is what counts as a “regular place of business” — and what exceptions blow that rule wide open.
The commuting rule that costs people thousands
The default rule: driving from your house to your office, your usual coffee-shop coworking spot, or any other regular work location is a personal commute. Not deductible. Period.
This is the most expensive misconception in self-employment taxes. A freelancer driving 12 miles each way to the same coworking space five days a week is logging 6,000 miles a year of nondeductible commuting — and many of them think it’s deductible because it’s “for work.”
The home office exception that changes everything
If your home qualifies as your principal place of business under §280A(c)(1)(A), Rev. Rul. 99-7 says your home itself counts as a business location. That means trips from your home to any other business location in the same trade become deductible business miles.
For a real estate agent who runs the administrative side of the business from a dedicated home office, the trip from home to a property showing is a business mile, not a commute. For a freelance photographer whose editing studio is a converted spare bedroom, the trip from home to a client shoot is a business mile. The home office case was first established in Curphey v. Commissioner, 73 T.C. 766 (1980), and remains the workaround that makes self-employment vehicle deductions actually substantial.
To qualify, the home office must be used regularly and exclusively for business, and it must be your principal place of business. A kitchen table doesn’t count. A dedicated room used only for work does.
Temporary work locations and the one-year rule
If you travel from home to a work location you reasonably expect to last one year or less, and it actually does last one year or less, that’s a temporary location. Trips to it are deductible business miles — even without a home office, as long as it’s outside the metropolitan area where you normally work, or you have one or more other regular work locations.
If you reasonably expect the work to last more than one year when you start, it’s not temporary, and trips to it are commuting from day one — even if circumstances change and it ends sooner.
First-stop, last-stop, and the trips between
Without a qualifying home office, the trip from your home to your first business stop of the day is a commute. So is the trip from your last business stop back home. Trips between business stops during the day are always deductible business miles.
A delivery driver who leaves home, drives 25 miles to the first delivery, makes 40 miles of deliveries, then drives 18 miles home has 40 deductible business miles, not 83.
With a qualifying home office, that same driver has 83 deductible miles. The home office rule is genuinely that consequential.
Documentation: what the IRS actually requires
The mileage deduction has one of the strictest substantiation requirements in the tax code. It lives in IRC §274(d), which governs “listed property” — and passenger automobiles are listed property under §280F(d)(4).
The four elements of an adequate record
Under Treasury Regulation §1.274-5T(b)(6), for each business use of the vehicle you must record:
- The amount — miles driven for the business use, and total mileage for the period.
- The date — when the use occurred.
- The business purpose — what you were doing and why.
- The business relationship — who you met with, if applicable.
A bare odometer reading isn’t enough. A spreadsheet showing dates and totals isn’t enough. Each business trip needs all four elements.
Why “contemporaneous” is the word that matters
Treasury Regulation §1.274-5T(c)(2) requires that records be made “at or near the time of the expenditure or use.” Publication 463 echoes this: “You should record the elements of an expense or of a business use at or near the time of the expense or use.”
This is the rule that catches taxpayers. A perfectly accurate mileage log built in March from credit card statements and calendar entries — for the prior tax year — is not contemporaneous, no matter how meticulous it is.
Three Tax Court cases where mileage deductions were thrown out
The Tax Court is unsentimental about §274(d). It applies the rule strictly, and the Cohan rule — which lets courts approximate deductions where exact records are lost — explicitly does not apply to listed property.
Khan & Tahir v. Commissioner, T.C. Summary Op. 2025-5 (February 2025). The Tax Court disallowed all of the taxpayers’ vehicle and travel deductions. No contemporaneous log. No receipts. The court refused to apply Cohan, citing §274(d).
Eze v. Commissioner, T.C. Memo. 2022-83. A healthcare consultant submitted records that the court found insufficient to establish dates, destinations, or business purpose of the claimed travel. Deductions denied.
Wolpert v. Commissioner, T.C. Memo. 2022-70. A civic consultant lost his vehicle deductions because of “inadequate substantiation and a lack of contemporaneous records.” The court noted that even where the taxpayer’s claimed business activity was plausible, the absence of contemporaneous documentation was fatal.
There’s also the often-cited Kilpatrick, where a taxpayer’s mileage log was prepared more than two years after the driving occurred, using MapQuest. The court was unconvinced.
How long to keep your logs
The general rule is three years from the date of filing, but the IRS can audit back six years if more than 25% of gross income was omitted. The practitioner consensus is six years. For a vehicle you’ll keep for several years, that means logs going back to year one of business use — particularly important because of how depreciation recapture works.
Standard mileage vs. actual expenses: the decision that’s hard to reverse
This is the most consequential choice in self-employed vehicle deductions, and it’s worth understanding before you make it.
What each method actually covers
The standard mileage rate is a single per-mile number that includes:
- Gasoline (and gas taxes)
- Oil
- Maintenance and repairs
- Tires
- Insurance
- Vehicle registration
- Depreciation (or lease payments)
You cannot deduct any of those items separately if you use the standard rate.
The actual expense method lets you deduct the business-use percentage of every cost above, plus depreciation under MACRS (subject to §280F luxury auto caps), §179 expensing, and bonus depreciation if the vehicle qualifies.
Under both methods, you can also deduct:
- Parking fees and tolls (business-related)
- The business portion of auto loan interest
- The business portion of state and local personal property taxes on the vehicle
When the standard mileage rate wins
- High-mileage drivers in fuel-efficient or older vehicles. A 2018 Toyota Corolla driven 25,000 business miles isn’t generating $18,125 of actual expenses.
- Anyone who values simplicity. Standard mileage means tracking miles and trips, not receipts and odometer readings for every gas fill-up.
- Anyone in year one who isn’t sure. Default to standard. It preserves flexibility.
When actual expenses win
- Low-mileage drivers in expensive vehicles. A $75,000 SUV driven 5,000 business miles will generate far more than $3,625 of actual depreciation, fuel, and insurance costs.
- Heavy SUVs and trucks over 6,000 lb GVWR in the year of purchase, where §179 expensing (up to $32,000 in 2026 for the heavy-SUV cap) plus bonus depreciation can produce a much larger first-year deduction.
- Specific high-cost years — major repairs, new tires, large insurance premiums — where actual expenses exceed what the standard rate would yield.
The irreversibility trap
If you start with actual expenses and claim MACRS, §179, or bonus depreciation in year one, you cannot switch to the standard mileage rate for that vehicle, ever. If you start with the standard mileage rate, you can switch to actual in a later year — though you’ll be required to use straight-line depreciation for the rest of the vehicle’s useful life under Rev. Proc. 2003-76.
This asymmetry is why year-one matters so much. Standard mileage is the reversible choice. Actual expenses with accelerated depreciation is the one-way door.
Reporting mileage on Schedule C
Vehicle expenses go on Schedule C, Part II, Line 9 — “Car and truck expenses.” The 2025 Schedule C instructions phrase the standard mileage calculation directly: multiply business miles by the rate, add parking and tolls, and enter the total. For 2026, multiply by 0.725.
Where exactly it goes (Line 9 + Part IV)
If you’re using the standard mileage rate AND not filing Form 4562 for any other reason, you’ll also complete Schedule C Part IV “Information on Your Vehicle”:
- Line 43: Date you placed the vehicle in service for business
- Line 44a: Business miles
- Line 44b: Commuting miles
- Line 44c: Other personal miles
- Line 45: Was the vehicle available for personal use during off-duty hours?
- Line 46: Do you (or your spouse) have another vehicle available for personal use?
- Line 47a: Do you have evidence to support the deduction?
- Line 47b: If yes, is the evidence written?
Line 47b is where contemporaneous records earn their keep. A “no” answer here invites audit scrutiny.
When Form 4562 replaces Part IV
If you’re using actual expenses, claiming depreciation, §179, or bonus depreciation, you fill out Form 4562 Part V for vehicle information instead of Schedule C Part IV.
What triggers Schedule C audits
Practitioners commonly identify a handful of patterns the IRS DIF system flags (the IRS doesn’t publish its formula, so these are inferred from audit experience):
- Round-number mileage totals (5,000, 10,000, 15,000 — life rarely generates such clean numbers)
- 100% business use claims on a personal vehicle without a documented second personal vehicle
- Annual business miles dramatically above industry norms (practitioners cite ~35,000 miles per single Schedule C business as a soft ceiling)
- Schedule C expense ratios that fall well outside the NAICS-code peer range
- Mileage inconsistent with odometer evidence from oil-change or state inspection records
None of these are automatically disqualifying. They just raise the odds of getting a letter.
Three real scenarios with real dollar impact
Specific numbers help more than principles. Three short cases, all using the 2026 rate of 72.5¢.
Tuesday for a rideshare driver
Maria drives for Uber. She qualifies for the home office exception because her dispatching, recordkeeping, and ride-acceptance management is all done from a dedicated home office.
- 7:15 AM — Leaves home, drives 8.2 miles to high-demand zone. Business miles.
- 7:30 AM – 1:45 PM — 14 rides, 121 miles of accepted-ride and between-ride driving. Business miles.
- 1:45 PM — Drives 12.6 miles home. Business miles.
Total: 141.8 miles × $0.725 = $102.81 deduction for one day.
Maria works 4 days a week. Her annual mileage deduction is approximately $20,500. In the 22% marginal tax bracket, with 15.3% self-employment tax also reduced, her real cash savings are roughly $7,650 a year — not the $4,510 you’d get if you only considered income tax.
A real estate agent showing eight homes
David is a licensed real estate agent. His home office qualifies (dedicated room, used regularly and exclusively for managing his brokerage business). On a Saturday in March:
- 8:30 AM — Home to first showing, 7.4 miles
- Eight property showings across his metro area, totaling 81.2 miles between properties
- 4:15 PM — Final showing back home, 7.8 miles
Total: 96.4 miles × $0.725 = $69.89 for the day.
Saturdays in spring are his busiest. If David averages 80 deductible miles per workday across 220 active workdays a year, his annual deduction is $12,760. At a 24% marginal rate plus 15.3% SE tax, that’s roughly $5,020 in real savings.
A freelance photographer’s three-shoot day
Amina is a wedding and portrait photographer. Her converted spare bedroom is her editing studio — principal place of business confirmed.
- 6:45 AM — Home to engagement shoot at a state park, 42 miles
- 11:30 AM — Park to portrait studio rental, 28 miles
- 2:45 PM — Studio to evening reception venue, 81 miles
- 11:15 PM — Venue back home, 37 miles
Total: 188 miles × $0.725 = $136.30 for that day.
Amina shoots roughly 40 weddings a year plus engagement and portrait sessions. Her total business mileage is around 14,000, generating a $10,150 deduction.
If the IRS questions your mileage: an audit defense playbook
Mileage audits aren’t common, but they’re not rare either, and the consequences of a poorly documented deduction are severe.
What the auditor will ask for
In a typical correspondence or office audit involving vehicle expenses, the IRS requests:
- Your contemporaneous mileage log for the year(s) in question
- Documentation showing the vehicle’s odometer readings at the beginning and end of each year
- Calendar entries, appointment records, or other corroborating evidence of the business purpose of trips
- Receipts for parking and tolls claimed separately
- For actual expense filers: receipts for all claimed expenses
Why an app-generated export is harder to contest
A handwritten notebook can be challenged on multiple grounds: was it written contemporaneously, or filled in later? Are the entries consistent with odometer records? Were trips fabricated?
An automatically generated log from a tracking app is harder to attack. GPS timestamps prove when each trip occurred. Route data shows the actual path driven. The data is created in real-time, which directly satisfies §1.274-5T(c)(2)‘s “at or near the time” standard.
This is the case for using automatic tracking — not because the IRS prefers it (the IRS doesn’t endorse specific tools), but because the audit defense properties of contemporaneous GPS data are substantially stronger than reconstructed records.
What to do if you don’t have a contemporaneous log
If you’re under audit and you don’t have a contemporaneous log, the picture is bleak but not hopeless. The Cohan rule won’t help — §274(d) explicitly overrides it for vehicles. But you can sometimes salvage deductions by reconstructing the most credible evidence available: calendar entries from the year, client emails confirming meeting locations and dates, receipts placing you at specific locations, Google Maps timeline data if you had location history enabled.
Be honest with your tax professional about what you have. Aggressive reconstruction that crosses into fabrication is a §6663 civil fraud risk — 75% penalty plus possible criminal exposure.
The lesson is the obvious one: keep contemporaneous records starting now. Going forward is fixable. The past is not.
How your 1099-K and mileage log work together
For rideshare, delivery, and platform workers, the 1099-K threshold matters less than it used to under OBBBA, but the mechanics still trip people up.
Your 1099-K reports gross payments — the total of what the platform paid you, including fees the platform later took back. That number is not your taxable income. Your taxable income is your Schedule C net profit after all business deductions, of which mileage is usually the largest.
Worked example. An Uber driver receives a 2026 1099-K showing $34,000 in gross payments. She drove 22,000 business miles. Her Schedule C looks roughly like this:
Her income tax is calculated on that $9,150 (plus her other income), not the $34,000. Her self-employment tax (15.3% on 92.35% of net profit) is also calculated on that smaller number. The mileage deduction saves her tax twice — once on income tax, once on SE tax — which is why combined effective savings are typically 30–45 cents per business mile, not 16–22 cents.
State considerations for self-employed drivers
For most self-employed taxpayers, the federal mileage deduction flows directly through to state income tax. Most states with income tax start their calculation from federal AGI or federal taxable income, so the federal deduction automatically reduces state taxable income.
Nine states have no relevant state income tax: Texas, Florida, Washington, Nevada, South Dakota, Wyoming, Alaska, Tennessee, and New Hampshire.
California’s non-conformity
California is the major exception. California’s IRC conformity date remains January 1, 2025, meaning California does not conform to OBBBA. For mileage specifically, California still accepts the federal standard mileage rate. But California decouples from §168(k) bonus depreciation (fully disallowed at the state level), caps §179 at $25,000 (vs. federal $2.56M), and modifies §280F treatment.
If you use the standard mileage rate, none of this matters. If you ever switch to actual expenses, you’ll need to maintain a separate California depreciation schedule. Multi-state self-employed taxpayers with California nexus should plan for this complication.
Other states with frequent partial conformity issues include Massachusetts, Pennsylvania, and New Jersey. When in doubt, check with a state-licensed tax professional.
The bottom line for 2026
The mechanics for 2026 are clearer than they were last year. The business rate is 72.5¢, OBBBA settled the W-2 question and reset the 1099-K threshold, and the standard-vs-actual decision is the same one self-employed drivers have always faced. Most people who drive for work and aren’t operating a fleet will be better served by the standard rate plus an honest contemporaneous log than by actual expenses and a stack of receipts.
The actual hard part isn’t choosing a method. It’s keeping records consistently enough that, if a letter from the IRS ever arrives, you can answer it with a log instead of a reconstruction.
EveryLastMile is built for that. Every business mile you drive is logged automatically by your phone’s sensors, classified with a swipe, and exported as an IRS-ready report whenever you need it. No notebook, no forgotten trips, no January-of-next-year scramble.
Frequently asked questions
What is the IRS mileage rate for 2026?
The 2026 IRS standard mileage rate for business use is 72.5 cents per mile, up 2.5 cents from 2025. The medical rate is 20.5¢, the moving rate (Armed Forces only) is 20.5¢, and the charitable rate is 14¢. These were announced in Notice 2026-10.
Can W-2 employees still deduct mileage in 2026?
No. The One Big Beautiful Bill Act (OBBBA) permanently disallowed unreimbursed employee business expense deductions, including mileage, starting in 2026. The exceptions are Armed Forces reservists, fee-basis state and local officials, qualified performing artists, and eligible educators.
How do I calculate mileage for self-employed taxes?
Multiply your business miles by 0.725 (the 2026 rate). Add parking fees and tolls related to business trips. The total goes on Schedule C, Line 9. Example: 12,000 business miles × $0.725 = $8,700, plus $180 in parking = $8,880 deduction.
What's the difference between standard mileage and actual expenses?
Standard mileage is a flat per-mile rate that covers gas, oil, insurance, repairs, registration, and depreciation in one number. Actual expenses tracks each cost separately and multiplies by your business-use percentage. Standard is simpler; actual can be larger for expensive vehicles or heavy SUVs eligible for §179 expensing.
Do I need receipts for the standard mileage rate?
You don't need fuel or repair receipts (those are bundled into the rate), but you do need receipts for parking and tolls claimed separately, and you must keep a contemporaneous mileage log documenting each business trip.
What does an IRS-compliant mileage log require?
Under Treas. Reg. §1.274-5T(b)(6), each business trip log entry must include: the miles driven, the date, the business purpose, and the business relationship (if applicable). The records must be made "at or near the time" of each trip.
Can I switch from standard mileage to actual expenses?
Yes, if you used standard mileage in the vehicle's first business year. After switching, you must use straight-line depreciation for the remainder of the vehicle's useful life. If you used actual expenses with MACRS, §179, or bonus depreciation in year one, you are permanently locked out of standard mileage for that vehicle.
Is commuting deductible for self-employed?
No. Driving from your home to a regular place of business is a personal commute, not a business mile — even if you're self-employed. The home-office exception under §280A(c)(1)(A) changes this: if your home is your principal place of business, trips from home to other business locations become deductible.
Can rideshare drivers deduct mileage between rides?
Yes. Time and miles spent driving to pickup locations and between rides are deductible business miles for rideshare drivers. The IRS considers this part of the business activity, not personal driving.
How much mileage can I claim without getting audited?
There's no specific number that triggers an audit, but practitioners often flag claimed business mileage above ~35,000 miles per single Schedule C business as a soft ceiling that increases audit risk. The bigger risk factors are round-number totals, 100% business use claims without a documented second personal vehicle, and inconsistencies with odometer records.
Is gas deductible if I use the standard rate?
No. The 72.5¢ rate already includes gasoline. Deducting gas separately when using the standard rate is double-dipping and will be disallowed.
What was the 2025 IRS mileage rate?
70 cents per mile for business use. It was set by Notice 2025-5.
Do I have to choose mileage or actual expenses in year one?
Yes, and the choice has significant downstream consequences. For owned vehicles, you must elect standard mileage in the first year of business use to preserve the option to switch later. For leased vehicles, your year-one choice is binding for the entire lease, including renewals.
What miles count for real estate agents?
With a qualifying home office: trips from home to showings, listing appointments, brokerage meetings, closings, and between properties are deductible. Without a home office: only trips between business locations during the day are deductible — the first and last trips of the day are commuting.
What's the new $10,000 vehicle loan interest deduction?
OBBBA created a new above-the-line deduction (IRC §163(h)(4)) for tax years 2025–2028. Up to $10,000 per year of interest on a new U.S.-assembled personal vehicle loan is deductible, subject to MAGI phase-outs starting at $100,000 single / $200,000 married filing jointly. Self-employed taxpayers must allocate the interest between business and personal use under Notice 2025-57.
This article is for educational purposes and is not tax, legal, or financial advice. Tax law is complex and applies differently to individual situations. For decisions about your specific circumstances, consult a licensed tax professional (CPA or EA). EveryLastMile is a mileage tracking application; it does not prepare or file tax returns.