Did you know you can claim mileage deductions if you use your vehicle for business or certain other approved activities? You calculate this deductible amount using the IRS mileage rates. Since the IRS updates these official rates regularly to reflect costs like fuel and maintenance, you must know the current rates to claim your deduction accurately.
Today, we will walk you through the official rates for the 2026 tax year and share key details. We will especially focus on who can and who cannot claim these write-offs.
IRS-Approved Standard Mileage Rates for 2026
The IRS announced the updated standard mileage rates for 2026 in December 2025. These rates are used to calculate the deductible cost of driving a vehicle for business, medical, or charitable purposes during the 2026 calendar year:
- Business: You may deduct $0.725 per mile driven for business purposes. This is an increase of 2.5 cents from the 2025 rate.
- Medical & Moving: The rate is $0.25 per mile driven for medical travel. Note: the moving expense deduction is largely suspended and applies to very few people.
- Charitable Activities: The rate remains $0.14 per mile driven for charitable work. This specific rate is set by federal law.
How Mileage Deduction Works for Entrepreneurs or Self-employed Individuals
Entrepreneurs or self-employed individuals can deduct all expenses from using their vehicle for business. You can still use your vehicle for personal errands, but you must track only the business miles driven. The IRS only allows you to deduct business-related expenses.
To qualify for a deduction on your annual tax return, you must keep documentation (records) of all your business-related travel to prove your claim.
How Mileage Deduction Works For Employers
As an employer, you are not required to reimburse employees for business mileage. However, doing so can help you attract and keep workers.
A straightforward way to reimburse employees is to adopt the IRS’s standard mileage rate. If you use this method, your employees must submit monthly travel logs.
- This reimbursement is the employee’s money back from you.
- You should not include it in their taxable income, as it is not considered a benefit.
It is up to you to set a reimbursement rate higher or lower than the IRS standard. However, the IRS will not allow you (the employer) to claim deductions that exceed the approved rate.
You can include the total amount spent on employee mileage reimbursements in your business expenses, which reduces your taxable income. Accuracy is key here. To avoid issues with the IRS and ensure you never overpay taxes, consider working with a tax strategist or consultant.
How Mileage Deduction Works For Employees
While your employer can still choose to pay you back (reimburse you) for business mileage, a critical federal change has been in effect since 2018. The deduction for unreimbursed employee business expenses, including mileage, is suspended for tax years 2018 through 2025 (and possibly longer).
This means that most W-2 employees cannot deduct business-related mileage on their federal tax return. They cannot claim it even if their employer chooses not to pay them back, and even if they itemize their deductions.
Exceptions: A few specific exceptions allow an employee to deduct unreimbursed mileage, including:
- Members of a reserve component of the Armed Forces.
- Qualified performing artists.
- Fee-basis state or local government officials.
- Individuals with impairment-related work expenses.
Reimbursement by Employer
Since most employees cannot deduct mileage themselves, the only way a typical employee can be paid for business driving is through a tax-free employer reimbursement. Your employer can choose to reimburse you using:
- The IRS standard rate.
- A fixed and variable rate (FAVR) allowance.
- A monthly allowance.
To avoid the extra amount being taxed as a benefit, reimbursements should not exceed the standard IRS rate.
Claiming Tax Deductions with IRS Mileage Rates
How you claim your mileage deduction depends entirely on your status:
- Self-Employed Individuals: You claim your mileage deduction as an ordinary and necessary business expense on Schedule C (Form 1040).
- Medical and Charitable Activities: If you are claiming mileage for these activities, you must itemize your deductions on Schedule A (Form 1040).
- Moving Expense Limitation: You can no longer claim the mileage deduction for moving purposes unless you fall into one of the exempted groups mentioned earlier.
Calculating Mileage Deductions: Standard Vs Actual Expenses
Standard Mileage Deduction and Actual Expenses are the two main methods of calculating mileage deductions. The following is a breakdown of how each method works.
Standard Mileage Deduction
Choosing the standard rate is simpler. You calculate your deduction by multiplying the total business miles you drove by the IRS-approved mileage rate. For this method, you must track your business mileage and either own or lease the vehicle for business use.
Actual Expenses
The actual expenses method involves deducting the costs you incurred from using your vehicle for business. This can be more tedious than the standard rate. These costs typically include:
- Vehicle depreciation
- Lease payments
- Insurance
- Maintenance and repairs
- Licensing fees
- Registration fees
Each method has pros and cons, depending on your business needs and preferred level of record-keeping.
Do You Need Expert Help With Claiming Mileage Deductions?
Dealing with mileage deductions and tax rules can be difficult. A tax expert can make the process stress-free. The best expert will take the time to understand your goals and create an effective strategy to help you achieve them without breaking any tax laws.
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