IRS Increases Standard Mileage Rate for Business Driving in 2026

Last updated Dec 30, 2025

IRS Announces Increased Mileage Deduction for Business Drivers

Good news for individuals who use their personal vehicles for business purposes. Beginning in the new year, you can expect a higher mileage deduction on your taxes.

Rising Standard Mileage Rate for Business Driving

According to an announcement made recently by the Internal Revenue Service (IRS), the standard mileage rate for business driving will rise by 2.5 cents per mile. On the other hand, vehicles used for medical purposes will see a decrease of half a cent. The IRS attributes this to the “updated cost data and annual inflation adjustments”.

The standard mileage rate, a figure established by the IRS and denoted in cents per mile, is utilized to calculate the deductible costs associated with using a personal vehicle for business purposes. Self-employed individuals, freelancers, gig workers, and small businesses that rely on personal vehicles for their operations can claim the standard mileage deduction on their tax returns. This rate also applies to vehicles used for medical or moving purposes by active-duty military personnel, as well as for charity work.

New Mileage Rates Effective January 1

Starting from the 1st of January, the standard mileage rates for the use of a car, van, pickup, or panel truck will be 72.5 cents per mile for business use. For medical purposes and moving purposes for certain active-duty members of the Armed Forces, the rate will be 20.5 cents per mile. However, the rate for miles driven in service of charitable organizations will remain at 14 cents per mile, as stated by the IRS.

Applicability of Rates

These updated rates apply to all types of vehicles including fully-electric and hybrid cars, as well as those powered by gasoline or diesel. If taxpayers are leasing a vehicle, the standard mileage rate must be applied for the entire lease period, including any renewals.

Optional Use of Standard Mileage Rate

However, it’s important to note that the IRS provides an option for taxpayers. They may choose to use the standard mileage rate or calculate the actual costs of using their vehicle.

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The meta title for this article would be: “IRS Increases Mileage Deduction for 2023: What You Need to Know”

The meta description would be: “The IRS has announced an increase in the standard mileage rate for business driving. Learn about the new rates and how they affect your tax deductions in 2023.”