Hit the Breaks: 2026 Tax Write-Offs for Business Driving

At the end of last year, the IRS announced its annual inflation adjustments to the optional standard mileage rates used to calculate the deductible vehicle operating costs for business, charitable, medical or moving purposes. And there's good news for those who drive for work: The cents-per-mile deduction increased for this year — even though the average price of gas around the country has decreased since last year at this time. On the downside, the deduction for other purposes has either declined slightly or remained unchanged from 2025. Let's cruise into the specifics.

Deduction Amounts

Beginning on January 1, 2026, the standard mileage rates for a car, van, pickup or panel truck are:

• 72.5 cents per mile for business driving (up from 70 cents in 2025),
• 20.5 cents per mile for medical driving (down from 21 cents), and
• 14 cents per mile for driving in service to charitable organizations (unchanged).

Important: Active-duty members of the Armed Forces and certain members of the intelligence community can deduct moving expenses when they must move under orders for a change of station. In these cases, eligible taxpayers can deduct 20.5 cents per mile in 2026 (down from 21 cents). Other taxpayers can't claim a deduction for moving expenses.

Gas Prices

The standard mileage rate for business use is calculated using an annual study of the fixed and variable costs of operating an automobile. Meanwhile, the calculation to determine the rate for medical and moving purposes uses only the study's variable costs. The rate for charitable driving is set by law and has remained the same since 1998.

As mentioned, the national average price of gas has gone down from a year ago. On January 30, 2026, the national average price of a gallon of regular unleaded gas was $2.87, according to AAA Fuel Prices, compared with $3.12 per gallon a year earlier.

Of course, depending on where you live or work, gas prices may be much higher or lower than the national average. For example, on January 30, 2026, the average price of a gallon of regular unleaded gas was $4.30 in California and $2.59 in South Carolina. In some cases, when gas prices are falling or rising significantly, the IRS has even made midyear changes to the standard mileage rate.

Note: Although fully electric and hybrid vehicles use no gas or less gas, the standard mileage rates also apply to them.

Rules for Business Deductions

If you use a vehicle for work, you can generally deduct the portion of eligible vehicle expenses attributable to business use. These include gas, oil, tires, insurance, repairs, licenses and vehicle registration fees — provided the expenses are properly documented and supported by records showing the percentage of business use. This is commonly referred to as the actual expense method.

In addition, you may claim a depreciation allowance for the vehicle based on the percentage of business use. However, annual write-offs are subject to so-called "luxury car" limits, which are indexed annually for inflation.

If you don't want to use the actual expense method, there's an easier option. You may be able to simply apply the standard cents-per-mile rate noted above. Doing so means you don't have to account for all your eligible expenses, though you must still record the following for each business trip:

• Mileage,
• Date(s),
• Destination(s),
• Names and relationships of the business parties involved, and
• Business purpose.

Again, use of the standard mileage rate is optional. Some taxpayers choose the more arduous actual expense method. Why? One reason is that you generally can't use the standard mileage rate for a vehicle after claiming accelerated depreciation (including the Modified Accelerated Cost Recovery System) or a Section 179 deduction for the vehicle in question. In addition, you can't use the standard mileage rate for more than four vehicles used simultaneously.

Note: For a leased vehicle, taxpayers using the standard mileage rate must employ that method for the entire lease period, including renewals.

Turn Business Miles into Savings

Whether you use the actual expense method or apply the standard mileage rate, deducting business driving costs is relatively simple and potentially valuable in terms of tax savings. However, the IRS requires documentation in either case.

Taking the time to track your mileage and other key data points consistently throughout the year can help you maximize deductions and avoid IRS challenges to your tax return. If you're unsure which method is best for your situation, or you'd like some help with the calculations, contact your tax advisor for guidance.