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- IRS hands workers bigger tax break for business expenses in 2026 (foxbusiness.com)
Buckle Up, Business Drivers! Your Mileage Deduction Just Got a Boost for the New Year
Good news for all the road warriors, gig workers, and self-starters out there! The Internal Revenue Service (IRS) announced a welcome change for the upcoming tax season: you’ll be able to deduct more per mile for business use of your personal vehicle.
Starting January 1st, the standard mileage rate for business driving is increasing by 2.5 cents, bringing the new rate to a robust 72.5 cents per mile. This adjustment, according to the IRS, reflects “updated cost data and annual inflation adjustments,” acknowledging the real-world expenses of hitting the road for work.
For those unfamiliar, the standard mileage rate is a figure set by the IRS in cents per mile, used to calculate the deductible costs of using a personal vehicle for various purposes when filing federal income taxes. This is a significant perk for self-employed individuals, freelancers, small businesses, and anyone else who uses their car for business, allowing them to claim a deduction on their tax returns.
It’s not just business drivers seeing changes, though. While medical and moving purposes will see a slight decrease of half a cent, settling at 20.5 cents per mile, the rate for charitable organizations will remain steady at 14 cents per mile.
These rates apply uniformly to all vehicle types, whether you’re cruising in a fully-electric, hybrid, gasoline, or diesel-powered ride. And if you’re leasing your vehicle, remember that the standard mileage rate applies for the entire lease period, including any renewals.
The IRS clarifies that the medical and moving purpose rates are calculated based on variable costs like gas, oil changes, and routine maintenance – those expenses that directly increase the more you drive.
It’s also worth noting that the standard mileage rate is an optional choice for taxpayers. You always have the alternative to meticulously calculate the actual costs of using your vehicle for business, medical, or moving purposes, if that approach proves more beneficial for your specific situation.
So, as you gear up for the new year, keep these updated figures in mind. It could mean a little extra cash back in your pocket when tax season rolls around!
Read More About This Story:
- IRS hands workers bigger tax break for business expenses in 2026 (foxbusiness.com)