By Gary G. Wallace, CPA, Managing Partner
2026 mileage rates explained for employers and self-employed taxpayers
The IRS has released the 2026 standard mileage rates, including an increase for business vehicle use. Effective January 1, 2026, the business mileage rate rises to 72.5 cents per mile, up 2.5 cents from 2025.
The standard mileage rate is an optional method businesses and self-employed individuals can use to deduct vehicle operating costs instead of tracking actual expenses. For many taxpayers, it remains a simpler, more predictable approach.
2026 standard mileage rates
- Business use: 72.5 cents per mile (increase from 70 cents)
- Medical use: 20.5 cents per mile (decrease from 21 cents)
- Moving (qualified active-duty military): 20.5 cents per mile (decrease from 21 cents)
- Charitable use: 14 cents per mile (unchanged)
These rates apply to gas, diesel, hybrid, and fully electric vehicles.
Additional IRS vehicle limits for 2026
The IRS also updated several vehicle-related thresholds that may affect employers and reimbursement plans:
- Depreciation portion of mileage rate: 35 cents per mile
- Maximum auto cost under a Fixed and Variable Rate (FAVR) plan: $61,700
- Maximum value for employer-provided vehicles: $61,700
These limits are especially important for companies offering vehicle allowances or mileage reimbursement programs.
Important reminder on employee deductions
The IRS reiterated that H.R. 1, formerly the One Big Beautiful Bill Act (OBBBA), permanently eliminated miscellaneous itemized deductions subject to the 2% AGI floor. This means employees cannot deduct unreimbursed mileage or travel expenses on their personal returns.
However, businesses may still:
- Deduct vehicle expenses directly
- Reimburse employees under accountable plans
- Claim certain above-the-line deductions that remain allowed
What businesses should do now
- Review your mileage reimbursement rates and policies for 2026
- Confirm whether the standard mileage rate or actual cost method is more beneficial
- Ensure employee reimbursement plans are structured to preserve tax benefits
Keiter insight: Small rate changes can have a meaningful impact when multiplied across fleets, sales teams, or service staff. A proactive review now can help maximize deductions and avoid compliance issues later.
If you have questions about mileage deductions, vehicle reimbursement plans, or how these updates affect your business, your Keiter Opportunity Advisor can help.
About the Author
Gary G. Wallace, CPA, Managing Partner
Gary provides tax and business advisory services to business and individual clients. He has advised clients in various aspects of restructurings, including tax aspects of debt workouts and foreclosures, forgiveness of indebtedness, bankruptcy restructurings and liquidations, establishing liquidating trusts and partner-partnership transactions. Gary also has significant knowledge and experience in individual taxation, business taxation, and advising clients on all aspects of tax matters. He is the Managing Partner of the Firm.
More Insights from Gary G. WallaceThe information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.
