The IRS has announced a midyear increase in the standard mileage rate for business, medical and moving vehicle use, including for cars, SUVs, vans, pickup trucks and panel trucks, effective July 1, 2026. These rates apply to gasoline- and diesel-powered vehicles as well as electric and hybrid ones.  

Learn more about the new mileage rates and key tax planning considerations, particularly for businesses and the methods they use to report vehicle expenses. 

Business Vehicle Expense Reporting Options 

If you use a vehicle for business purposes, you generally have the option to deduct the actual expenses attributable to your business use. These include expenses such as gas, oil, tires, insurance, repairs, licenses and vehicle registration fees. In addition, you may claim a depreciation allowance for the vehicle based on the percentage of business use. However, annual write-offs for certain passenger autos are subject to “luxury car” limits that are indexed for inflation annually. 

The maximum first-year depreciation deduction allowed for a passenger car subject to the luxury car limits and placed in service in 2026 is generally $20,300 ($12,300 + $8,000 assuming bonus depreciation is claimed). So, the maximum first-year deduction for such a vehicle used 90% for business in 2026 would be limited to $18,270 (90% of $20,300). (Heavier SUVs, pickups, vans and panel trucks might be eligible for larger first-year depreciation deductions.)  

Keeping track of every vehicle-related expense under the actual expense method can be burdensome, but you may have a simpler option. You potentially can use the IRS standard mileage rate, if you do not operate than five or more cars at the same time (such as in a fleet operation).  

To use the standard mileage rate for a vehicle you own, you generally must choose it during the first year the vehicle is available for use in your business. In later years, you can choose to use the standard mileage rate or actual expenses. If you switch to actual expenses, however, special depreciation rules apply. For a leased vehicle, taxpayers electing the standard mileage rate must use that method for the entire lease period, including renewals. 

With the standard mileage rate, you don’t have to account for all your actual expenses. But for each business trip you must still record the: 

• Mileage 
• Dates 
• Destinations 
• Names and relationships of the business parties involved 
• Business purpose of the travel 

Most employees can’t deduct unreimbursed business mileage on their federal income tax returns. However, employers may use the standard mileage rate to reimburse employees tax-free under an accountable plan, provided applicable substantiation requirements are met. 

Mileage Rate Adjustments  

The IRS generally adjusts the standard mileage rates annually based on a study of vehicle operating costs. Recent increases in fuel prices have prompted these midyear adjustments, bringing the standard rates to the following through the end of 2026:  

• Business Use: Increased to 76 cents per mile (up 3.5 cents from the rate for the first half of the year). 
• Medical Care and Moving Use: 23.5 cents per mile (up 3.5 cents from the rate for the first half of the year). T 

The standard mileage rates for medical or moving use is significantly lower than the rate for business use because that rate takes into account depreciation, which isn’t an allowable vehicle expense deduction for medical or moving purposes.  

Additionally, you can deduct medical mileage only if you itemize deductions and only to the extent that your total eligible medical expenses for the year exceed 7.5% of your adjusted gross income. Moving expenses such as mileage are deductible only by certain active-duty military personnel and certain members of the intelligence community. But if you qualify, you don’t have to itemize to claim the moving expense deduction. 

The 14-cents-per-mile rate for charitable use of a vehicle remains unchanged. It’s set by statute, so it can only be amended by Congress. 

Navigating vehicle expense deductions can be tricky 

Determining which business vehicle expense reporting option is right for you or whether you can benefit from medical or moving mileage deductions may not be easy. Our tax pros can help assess your situation and implement a tax strategy for the rest of the year.