The US Internal Revenue Service (IRS) announced this week an increase in the tax deduction for business use of vehicles, raising the standard mileage rate by 2.5 cents per mile to 72.5 cents, while lowering the rate for medical purposes by 0.5 cents to 20.5 cents.
This adjustment, as stated by the IRS, reflects the “latest cost data and annual inflation adjustments.”
The standard mileage rate set by the IRS is a specific value measured in cents per mile (¢/mile) used to calculate deductible expenses for using a personal vehicle for business purposes when filing federal income taxes.
Self-employed individuals, gig workers, freelancers, and small businesses using personal vehicles for business activities can apply for the standard mileage deduction on their tax returns. Additionally, vehicles used for medical purposes, military relocations, and charitable work are also eligible for the standard mileage rate.
Overall, starting from January 1, 2026, the standard mileage rates for sedans, vans, pickups, or small trucks are: 72.5 cents per mile for business use; 20.5 cents per mile for medical purposes; 20.5 cents per mile for specific military personnel and intelligence personnel relocation purposes; and 14 cents per mile for charitable organization services.
The above rates apply to all-electric vehicles, hybrid cars, gasoline-powered vehicles, and diesel-powered cars. Taxpayers using leased vehicles throughout the lease term, including renewal periods, must apply the standard mileage rate.
Rates for medical and relocation expenses are based solely on costs that increase with driving mileage, such as fuel, oil changes, and basic vehicle maintenance expenses.
The IRS also noted that the standard mileage rate is not mandatory for taxpayers, as they can choose to calculate the actual expenses of their vehicle usage themselves.