The IRS has officially updated the mileage rates for the tax year 2026, affecting deductions used in 2027. These changes outline specific increases and decreases for various categories, including business, medical, military, and charitable uses.
2026 IRS Mileage Rate Overview
- Business Mileage Rate: The standard rate will increase to 72.5 cents per mile, up by 2.5 cents from 2025.
- Medical Mileage Rate: A slight decline to 20.5 cents per mile, down by 0.5 cents.
- Moving Mileage Rate for Military: Remains at 20.5 cents per mile for qualified active-duty members, reflecting a decrease of 0.5 cents from the previous year.
- Charitable Mileage Rate: Maintained at 14 cents per mile, as set by statute.
Relevant Legislation Changes
These new rates were influenced by recent legislative updates, notably the bill signed into law by President Donald Trump on July 4, 2025. This legislation included provisions specifically catering to certain members of the intelligence community.
Key Points on Mileage Claims
Many taxpayers fail to utilize the mileage deduction on their tax returns. Companies often reimburse employees based on IRS rates, yet this reimbursement typically negates their ability to claim a deduction. Self-employed individuals, however, can still deduct business mileage on their returns.
The IRS allows taxpayers to opt for either the standard mileage rate or to calculate actual vehicle expenses. However, they cannot mix methods for a single vehicle. It’s crucial to emphasize that for the 2025 tax returns being filed soon, the older mileage rates must be used.
Impact of Increased or Decreased Rates
The variations in mileage rates for business versus medical use reveal the IRS’s aim to adapt to economic factors and inflation rates. As a result, taxpayers must be strategic in their claims to optimize tax benefits.
Drivers should remain informed about how these changes affect them and consult with tax professionals if needed. Understanding these updates can help maximize benefits on federal income tax returns.
