Business Mileage Deduction Rate
The IRS standard mileage rate is the simplest way to deduct vehicle costs for business use — instead of tracking every gas receipt, oil change, and repair, you multiply your business miles by the IRS rate and deduct that amount. In 2026, the business rate is 72.5 cents per mile. The IRS adjusts this rate (usually twice a year) based on fixed and variable costs of operating a vehicle, including fuel prices. The standard rate is available to self-employed workers and business owners; employees who drive for work can no longer deduct unreimbursed mileage on their federal return under TCJA (the employee deduction was suspended through 2025 and its restoration is uncertain). If your actual vehicle costs — depreciation, insurance, fuel, maintenance — exceed what the standard rate captures, you can instead deduct actual expenses for the business-use percentage of the vehicle, but that requires detailed recordkeeping. Self-employed filers can pair this deduction with the home office deduction to maximize Schedule C write-offs.
Current Law (2026)
The IRS standard mileage rate provides a simplified method for deducting vehicle expenses for business, medical, and charitable driving.
| Purpose | 2026 Rate |
|---|---|
| Business | 72.5 cents/mile |
| Medical/moving (eligible groups) | 20.5 cents/mile |
| Charitable | 14 cents/mile (statutory, not indexed) |
Legal Authority
- 26 U.S.C. § 162 — Trade or business expenses
- 26 U.S.C. § 274 — Disallowance of certain entertainment, etc., expenses
- IRC Section 170(i) — Charitable mileage rate (set by statute)
How It Works
Taxpayers using a vehicle for business can choose between two deduction methods under 26 U.S.C. § 162: the standard mileage rate (72.5¢/mile in 2026, set by IRS Revenue Procedure and adjusted based on actual vehicle operating cost studies) or actual vehicle expenses (fuel, insurance, registration, maintenance, and depreciation prorated to the business-use percentage). The choice is consequential and generally irreversible: once you use the actual expense method for a vehicle, you generally cannot switch back to the standard rate for that vehicle in later years. See Section 179 Expensing and Bonus Depreciation for vehicle depreciation rules that interact with the actual-expense method.
The Tax Cuts and Jobs Act eliminated the miscellaneous itemized deduction for unreimbursed employee expenses under 26 U.S.C. § 274 — including mileage — for W-2 workers through at least 2025. Only self-employed individuals, partners, and S-corporation shareholders can deduct business mileage on their own returns. For employees, the only path to a tax benefit is employer reimbursement through an accountable plan at the IRS standard rate, which is tax-free to the employee and deductible to the employer. Recordkeeping is the most common audit failure: the IRS requires a contemporaneous mileage log showing date, destination, business purpose, and miles for each trip — mileage reconstructed from memory at tax time is a known audit trigger. Commuting miles (home to regular workplace) are never deductible under any method, regardless of commute distance or whether the taxpayer has a home office.
How It Affects You
If you're self-employed or a gig worker: Business mileage is often one of the largest single deductions available — and the most underused because people forget to track it. At 72.5 cents/mile, a rideshare driver logging 30,000 business miles deducts $21,750. At the 22% bracket plus 15.3% self-employment tax, that's roughly $8,300 in combined tax savings. Use a mileage tracking app (MileIQ, Everlance, Stride) to build a contemporaneous log automatically — the IRS requires a log showing date, destination, business purpose, and miles for each trip. Recreating mileage from memory at tax time is a red flag in audit.
If you're choosing between the standard rate and actual expenses: The standard mileage rate (72.5¢/mile) is simple but not always optimal. Actual expenses (gas, insurance, registration, repairs, depreciation) can produce a larger deduction for high-cost vehicles with low mileage, or for newer vehicles with significant depreciation (see Bonus Depreciation and MACRS Depreciation for vehicle depreciation rules). The catch: you must choose your method in the first year of business use and can't switch freely. If you're buying or leasing a new vehicle for business use this year, run the math on both methods before filing.
If you're a W-2 employee: The TCJA eliminated the miscellaneous itemized deduction for unreimbursed employee business expenses — including mileage. As a W-2 worker, your personal vehicle mileage for work is NOT currently deductible, even for remote employees driving to client sites. The only exceptions are Armed Forces reservists, performing artists meeting specific criteria, and fee-based government officials. If your employer doesn't reimburse you, advocate for a company mileage reimbursement program — the employer can reimburse at the IRS standard rate tax-free under an accountable plan.
If you do significant volunteer or charitable driving: The 14¢/mile charitable mileage rate is set by statute (IRC § 170), not by the IRS — it requires Congress to change, and it hasn't since 1997. The actual cost of driving in 2026 is roughly 5× that amount (the standard business rate is over $0.67/mile). Keep accurate mileage records for the deduction even though the rate is low, because it's still real money for high-volume volunteer drivers. If the gap between actual cost and the charitable rate bothers you, note that Congress has periodically introduced bills to raise the charitable mileage rate to match the medical/moving rate; the issue isn't entirely dormant politically.
State Variations
The federal standard mileage rate applies to federal taxes, but state income tax and state employment law treatment differs in ways that are especially important for California employees and for any W-2 worker in a state that still allows employee business expense deductions:
California — employer reimbursement is legally required: California Labor Code § 2802 requires employers to reimburse employees for all necessary business expenses, including mileage. Unlike the federal TCJA suspension (which removed the employee's ability to deduct unreimbursed mileage), California employees have a separate right to be reimbursed by their employer. Employees in CA can sue their employer for unpaid mileage reimbursement even if the federal tax deduction is suspended — it's an employment law right, not a tax right. The required rate is at least the IRS standard rate; if an employee's actual costs are demonstrably higher, California law may require reimbursement at the actual cost. This is especially important for remote workers, delivery employees, and field workers.
Other states with employer reimbursement requirements: Illinois (Sales Representative Act and broader wage payment law), Massachusetts, and several other states also impose employer mileage reimbursement obligations, though typically with less aggressive enforcement than California. Check your state's department of labor for specific requirements.
State income tax treatment of employee mileage deductions: Many states that follow federal itemized deductions did NOT conform to the TCJA's suspension of unreimbursed employee business expenses. States including California, New York, Pennsylvania, and Hawaii still allow their own version of the miscellaneous itemized deduction (typically subject to a 2% of AGI floor) — meaning W-2 employees in these states can deduct unreimbursed business mileage on their state returns even though the federal deduction is suspended. A California employee with $8,000 of unreimbursed business mileage who can't deduct it federally may still be able to claim the CA deduction.
Self-employed: all states conform to federal treatment: For self-employed workers and business owners deducting mileage on Schedule C (or equivalent state schedule), all states with income taxes follow the federal standard mileage rate or actual expense method. The choice between standard rate and actual expenses applies identically at the state level.
No-income-tax states (TX, FL, NV, WA, WY, SD, AK, TN, NH): Federal deduction is the only tax benefit; state treatment is irrelevant. California's employer reimbursement requirement still applies regardless of state income tax.
Implementing Regulations
Business mileage deduction regulations are in 26 CFR SS 1.274-5 (substantiation requirements for travel, entertainment, and car expenses) and 26 CFR SS 1.162-2 (traveling expenses). The standard mileage rate is set annually by IRS Revenue Procedure.
Pending Legislation
- HR 1691 (Rep. Grothman, R-WI) — Employee Business Expense Deduction Reinstatement Act of 2025: reinstates a partial deduction for unreimbursed employee expenses, letting W-2 workers deduct 85% of certain business meal, travel, and lodging costs through 2027. Would partially restore mileage deductibility for employees. Status: Introduced.
Recent Developments
- 2026 rate set at 72.5 cents/mile — up from recent years: The IRS announces the standard mileage rate annually via Revenue Procedure. The 2026 rate of 72.5 cents/mile for business driving reflects the elevated fuel costs and vehicle expenses of the current market. As recently as 2019, the rate was 58 cents/mile. The rate is set by IRS based on a study of fixed and variable costs of vehicle operation — high fuel prices, rising insurance premiums, and increased vehicle prices have pushed the rate higher. Taxpayers with high-mileage business use should confirm they're using the current-year rate when filing.
- W-2 employees cannot deduct mileage under TCJA: The 2017 TCJA eliminated the itemized deduction for unreimbursed employee business expenses (including mileage) through at least 2025. This change means that remote workers who drive to client sites, home health aides, salespeople, and others with significant job-related driving get no deduction unless their employer reimburses them. Employers who want to make their employees whole can set up an accountable reimbursement plan using the IRS standard rate — reimbursements within the standard rate are not taxable to the employee and are deductible to the employer. HR 1691 (119th Congress) would restore a partial employee mileage deduction but has not passed.
- Gig workers drive deductions down — 1099-K reporting changes: Delivery drivers, rideshare workers, and other gig workers for whom mileage is a primary expense now face expanded 1099-K reporting (for payments over $600 via apps). The mileage deduction remains one of the most valuable write-offs available to gig workers — for a driver doing 40,000 miles/year, the $29,000 deduction is often larger than any other expense. Accurate mileage tracking is essential given IRS scrutiny of Schedule C losses, particularly for gig workers with high income showing large deductions.
- Charitable mileage rate frozen by statute: The charitable driving rate (14 cents/mile) is set by statute (IRC § 170(i)), not by IRS Revenue Procedure, and cannot be adjusted administratively. It has been 14 cents/mile since 1997. Multiple bills have proposed indexing it to the medical/business rate, but none have passed. Volunteers who drive for charitable purposes should document their actual car expenses if they exceed 14 cents/mile — but the statute doesn't allow claiming the standard business rate for charitable purposes.