The IRS just raised the amount you can deduct for business miles for the second half of 2026. In plain English: if you drive for work, each business mile is worth more as a deduction starting July 1, 2026.

That means you’ll use two different mileage rates this year—one rate for miles driven from January through June, and a higher rate for miles driven from July through December. The IRS also increased the per-mile rate for medical travel and certain moving expenses for the rest of 2026.

Below is what changed, how the midyear rates work, and what to track if you use the standard mileage method.

Two ways to deduct business vehicle use

If you use a vehicle for business, you generally have two options:

1) Actual expense method
You deduct the business portion of your actual costs, such as:

• Gas and oil
• Tires, repairs, and maintenance
• Insurance and registration
• Licenses and fees

You may also claim depreciation based on business use. However, depreciation can be limited by the IRS “luxury auto” rules.

For 2026, the maximum first-year depreciation deduction for a passenger car placed in service is generally \$20,300 (the usual \$12,300 plus \$8,000 of bonus depreciation).
Example: If business use is 90%, the first-year depreciation deduction is limited to:

$$\mathrm{20,300}\times 0.90=\mathrm{18,270}$$

2) Standard mileage rate method
Instead of tracking every expense, you deduct a set amount per business mile. This method is simpler, but you still must keep good mileage records.

You generally can’t use the standard mileage rate if you:

• Use five or more cars at the same time (fleet use),
• Used MACRS, claimed bonus depreciation, or used a depreciation method other than straight-line,
• Took a Section 179 deduction for the vehicle, or
• Previously claimed actual expenses for a leased vehicle.

Important timing rules

• Owned vehicle: To use the standard mileage rate, you must choose it in the first year the vehicle is available for business use. In later years, you can choose either method. If you switch to actual expenses, special depreciation rules apply.
• Leased vehicle: If you choose the standard mileage rate, you must use it for the entire lease period, including renewals.

Midyear change: two business mileage rates for 2026

The IRS usually updates mileage rates once a year. However, unusual conditions can trigger a midyear adjustment. The last midyear change was in 2022.

For 2026:

• Jan 1–Jun 30, 2026: 72.5 cents per mile for business use
• Jul 1–Dec 31, 2026: 76 cents per mile for business use

The IRS is expected to publish 2027 mileage rates later this year.

How to apply both rates (simple example)

Assume you drive 10,000 business miles in each half of 2026 and pay \$1,000 total in tolls and parking.

First half deduction:

$$\mathrm{10,000}\times 0.725=\mathrm{7,250}$$

 

Second half deduction:

$$\mathrm{10,000}\times 0.76=\mathrm{7,600}$$

 

Total 2026 deduction:

$$\mathrm{7,250}+\mathrm{7,600}+\mathrm{1,000}=\mathrm{15,850}$$

Other mileage rate changes

For the second half of 2026:

• Medical travel and qualifying moving expenses: 23.5 cents per mile (up from 20.5 cents in the first half of 2026)
  • The moving rate generally applies only to certain active-duty military and certain members of the intelligence community.
• Charitable driving: 14 cents per mile (no change—set by statute)

Which method is best?

Even with the higher mileage rate, the actual expense method may still produce a larger deduction in some cases. The right choice depends on your vehicle costs, business-use percentage, and recordkeeping.

If you’d like help comparing methods and setting up the right documentation, contact your tax advisor.