Government Rate Per Mile: 72.5 Cents for 2026 Business Miles

The government mileage rate for 2026 is 72.5 cents per mile for business driving, set by the IRS in Notice 2026-10.¹ That is 2.5 cents higher than the 2025 rate of 70 cents. Lower rates apply to medical, military moving, and charitable driving. The rate rolls gas, insurance, depreciation, and maintenance into a single figure so you don’t have to track individual receipts.

The 2026 Rates

For miles driven on or after January 1, 2026:

The business and medical rates change each year because the IRS recalculates them from fuel prices, insurance costs, and depreciation trends. The 14-cent charitable rate is fixed by statute, so it doesn’t move with the market.² The moving rate applies only to active-duty Armed Forces members relocating under military orders and certain members of the intelligence community. Civilian moves aren’t deductible.

Who Can Use the Business Rate

Self-employed people are the primary users. If you drive for your business as a sole proprietor, independent contractor, or single-member LLC, you deduct business miles on Schedule C.

W-2 employees mostly cannot. The Tax Cuts and Jobs Act eliminated the deduction for unreimbursed employee expenses, and later legislation made that change permanent. Only four narrow categories of employees can still deduct business mileage using Form 2106: Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses.³ Everyone else on a W-2 relies on their employer’s reimbursement policy.

A few situations disqualify a vehicle from the standard rate even when you otherwise qualify. You must choose the standard rate in the first year you place the vehicle in business service. Skip that window and use actual expenses instead, and the standard rate is permanently off the table for that vehicle. For a leased vehicle, choosing the standard rate commits you to it for the entire lease, including renewals.⁴

You also can’t use the standard rate if you operate five or more vehicles at once (a fleet), if you previously claimed accelerated depreciation or Section 179 expensing on the car, or if you took the special depreciation allowance.⁴ Any of those pushes you to the actual expense method for that vehicle going forward.

What the 72.5 Cents Covers

The per-mile figure is built to capture the full cost of owning and operating the vehicle. Fixed costs like depreciation, insurance premiums, and registration fees are in there. So are variable costs like gasoline, oil changes, tires, and routine maintenance. Lease payments are covered too if you lease rather than own.

Because all of that is bundled, you can’t also deduct gas receipts, an insurance bill, or a brake job on top of the standard rate. The only vehicle costs you can add separately are parking fees and tolls, and those are deductible under either method.

Standard Rate or Actual Expenses

You always have two ways to deduct vehicle costs: the standard mileage rate or the actual expense method. The standard rate is simpler. Multiply business miles by 72.5 cents and you’re done. Actual expenses requires tracking every dollar spent on the vehicle, then applying the business-use percentage.

Actual expenses tends to produce a larger deduction when the car is expensive to operate, when a high share of relatively low total miles is for business, or when a newer vehicle qualifies for bonus depreciation or Section 179 expensing. A heavy SUV over 6,000 pounds placed in service in 2026 may qualify for first-year depreciation well beyond what the standard rate would deliver.

The standard rate wins when the car is cheap to run, you drive a lot of total miles, or you’d rather not manage a folder of receipts. It also sidesteps the depreciation recapture that comes with actual expenses. If you’re unsure, run both calculations in your first year. You can switch from the standard rate to actual expenses later, but not the reverse for the same vehicle. And if you do switch to actual expenses, you must use straight-line depreciation for the remaining useful life of the car rather than accelerated methods.⁴

Which Miles Count

Your daily commute doesn’t count. Driving from home to a regular workplace and back is commuting, and commuting is never deductible, regardless of distance.⁵

Deductible business travel includes trips from your office to a client site, from one client to another, or to a temporary work location. A temporary work location is one where the assignment is expected to last a year or less.⁶ Once the assignment is expected to run longer than a year, that place becomes a regular workplace and the drive becomes a nondeductible commute.

If your home is your principal place of business, trips from your home office to any work location in the same trade or business count as deductible business miles, even to the same location each day.⁵ That’s one reason many self-employed people keep a qualifying home office.

Employer Reimbursement

When your employer pays you for business mileage, tax treatment turns on whether the company uses an accountable plan. Under an accountable plan, mileage reimbursements are tax-free to you and stay off your W-2. The plan must meet three requirements:

Business connection: the expense must be a deductible business expense you incurred on the job.
Adequate accounting: you must submit records (dates, mileage, destinations, business purpose) within 60 days.
Return of excess: you must return any reimbursement above your documented expenses within 120 days.⁷

Reimbursement at or below the IRS standard rate under an accountable plan is fully nontaxable. If the employer pays above the standard rate and you don’t return the excess, the overage becomes wages subject to income and payroll taxes. Under a nonaccountable plan, which is one that skips any of the three requirements, the whole reimbursement lands on your W-2 as taxable wages. Federal law does not require employers to reimburse work driving, though a handful of states do.

Records You Need to Keep

The IRS expects a log of each business trip, recorded at or near the time you drive. Reconstructing from memory at tax time is the approach that collapses under audit. For every trip, capture:

Date of the trip.
Destination (city, client, or location).
Business purpose (why the trip was necessary).
Mileage, from odometer readings or a per-trip total.

Those four elements are what the IRS substantiation rules require. A paper notebook in the glove box works. A smartphone app that logs GPS automatically works. Either is fine as long as the four elements are captured close to the time of the trip.⁸

Keep the log for at least three years after you file the return that claims the deduction. That’s the standard IRS audit window.⁹

Where to Report It

Self-employed filers report business mileage on Schedule C of Form 1040. Part IV of Schedule C asks when you placed the vehicle in service, total annual miles, and how many were for business.⁵ The deduction reduces your business profit, cutting both income tax and self-employment tax.

The small group of employees who still qualify use Form 2106, and the result carries to Schedule 1 of Form 1040 as an adjustment to income.³

Medical mileage, when it qualifies, goes on Schedule A as part of total medical expenses, which only produce a benefit above 7.5% of adjusted gross income. Charitable mileage also goes on Schedule A, inside your charitable contributions.

Penalties for Padding the Log

Inflated mileage is one of the easier problems for the IRS to spot. Auditors compare claimed business miles against the vehicle’s total annual mileage and cross-check destinations against business records. If a deduction turns out to be wrong due to negligence or a substantial understatement of income, the accuracy-related penalty is 20% of the underpayment, on top of the tax and interest owed.¹⁰ Fabricating trips is fraud, which carries a 75% penalty under Section 6663 and can lead to criminal prosecution. In practice most trouble is poor records, not fraud, and keeping a real-time log is the simplest fix.

1
Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile
2
Office of the Law Revision Counsel. 26 U.S. Code 170 – Charitable, Etc., Contributions and Gifts
3
Internal Revenue Service. Instructions for Form 2106
4
Internal Revenue Service. Topic No. 510, Business Use of Car
5
Internal Revenue Service. Instructions for Schedule C (Form 1040)
6
Internal Revenue Service. Understanding Business Travel Deductions
7
Internal Revenue Service. Publication 463, Travel, Gift, and Car Expenses
8
eCFR. 26 CFR 1.274-5A – Substantiation Requirements
9
Internal Revenue Service. Managing Your Tax Records After You Have Filed
10
Office of the Law Revision Counsel. 26 U.S. Code 6662 – Imposition of Accuracy-Related Penalty on Underpayments