Are you still asking "Can I expense this...?" Use our free tool!
If you drive for business, the IRS gives you two ways to deduct the cost: track every actual expense or use the standard mileage rate. For most small business owners, the standard rate wins on simplicity and often on math too. Here is how the 2026 standard mileage rate works, what records you need to keep, and when to use it versus the actual expense method.
The IRS standard mileage rate is a single cents-per-mile figure that lets you deduct the cost of operating a vehicle for business without tracking individual receipts for gas, oil, repairs, insurance, and depreciation. Multiply the rate by your business miles for the year and you have your deduction.
The rate is set each year by the IRS in a Notice released in late December, based on an annual study of the fixed and variable costs of operating a vehicle: gas, maintenance, repairs, tires, insurance, and depreciation. Occasionally the IRS adjusts the rate mid-year if gas prices move significantly, as happened in mid-2022.
The 2026 IRS standard mileage rate for business use of a car, van, pickup, or panel truck is published in IRS Notice 2025-IRB, released in December 2025. The rate applies to all four-wheeled vehicle types including electric and hybrid-electric vehicles.
For comparison, here is the historical standard mileage rate trend:
Two other rates published in the same annual Notice: the medical and moving rate (typically 21-22¢ per mile, applies only to active-duty military for moving) and the charitable rate (set by statute at 14¢ per mile and does not adjust for inflation).
The actual expense method lets you deduct gas, oil, tires, insurance, repairs, registration, lease payments, and depreciation in proportion to business use of the vehicle. The standard mileage rate bundles all of those into a single per-mile figure, so you only track miles.
Standard mileage typically wins when: you drive a fuel-efficient vehicle (high mpg means lower actual costs than the rate assumes), the vehicle is older with lower depreciation left, you do not want the bookkeeping overhead, or you want simplicity for an employee reimbursement program.
Actual expense typically wins when: you drive a heavy vehicle with high gas costs, a newer vehicle with substantial depreciation available, a luxury vehicle (though depreciation caps apply), or one with high maintenance costs. For HVAC business owners and other service trades who drive expensive trucks long miles, the actual expense method often pencils out higher. See our HVAC accounting page for the broader vehicle-cost framework for trade businesses.
One catch: once you use the actual expense method on a vehicle, you generally cannot switch to standard mileage for that vehicle in later years. You can do it the other way (standard first, actual later) but not the reverse. Pick carefully in year one.
The IRS requires contemporaneous records (kept at or near the time of travel) showing the date, destination, business purpose, and miles for each business trip. A reconstructed log built at tax time is generally not accepted in an audit.
Practical setup: use a mileage tracking app (MileIQ, Everlance, QuickBooks Self-Employed, Stride) that auto-detects trips via GPS and lets you swipe to classify each as business or personal. The app produces an IRS-ready log at year end. Keep the app data backed up.
You also need to record the vehicle’s total annual mileage (business + personal) and the date you first used the vehicle for business. The total miles are needed to calculate the business-use percentage for any depreciation or actual-expense allocation.
Yes, and using the IRS standard mileage rate as the reimbursement is the most common method. Under an accountable plan, reimbursements at or below the IRS rate are tax-free to the employee and deductible to the business.
To qualify as an accountable plan, three conditions must be met: (1) the expense must have a business connection, (2) the employee must submit substantiation (mileage log, business purpose) within a reasonable time, and (3) any reimbursement in excess of expenses must be returned to the employer.
If your plan does not meet accountable-plan rules, the reimbursements become taxable wages to the employee and the business owes payroll tax on the amount. For small business owners running an S-Corp who reimburse themselves for business mileage, accountable-plan paperwork is critical. The complete S-Corp guide covers the owner-reimbursement framework.
Several situations disqualify the standard mileage rate. You cannot use it if you operate five or more vehicles simultaneously for business (a fleet operation must use actual expenses for each vehicle).
You cannot use it if you previously claimed actual expenses on the same vehicle (locked in for that vehicle’s life). You cannot use it on a vehicle you placed in service via Section 179 expensing or special depreciation in a prior year. And you cannot use it for a vehicle used for hire (taxi, ride-share are special cases with their own rules).
For first-year vehicles, you have a choice. If you want to claim Section 179 expensing or bonus depreciation on the vehicle in year one, you have to use the actual expense method for that vehicle going forward. If you start with the standard mileage rate, you can still later switch to actual expenses, but you are limited to straight-line depreciation on the vehicle from that point on.
Three mistakes account for most lost mileage deductions in audits: commuting miles claimed as business, missing or reconstructed logs, and inadequate accountable-plan paperwork for employee reimbursements.
Commuting miles are NOT business miles. The drive from home to your regular place of business is personal commuting, even if you carry business materials. Business miles start when you leave one work location and drive to another (client site, supplier, bank, second office). If you work from a qualified home office that is your principal place of business, miles from home to a client site are business miles.
If you have not been tracking miles all year and tax season is approaching, you cannot just write down a number. The deduction has to be supported by contemporaneous records. Start tracking now for the current year and rebuild what you can from calendar entries and email confirmations for the prior year.
For most small business owners driving a typical car, SUV, or light truck with average mileage and ownership, the standard mileage rate wins on math and simplicity. For business owners driving heavy-duty work trucks, vans loaded with equipment, or vehicles with high maintenance costs, actual expenses usually pencil out higher.
The right answer depends on your specific situation. We routinely run the math both ways for clients in their first year of business vehicle use, then lock in whichever method comes out better. If you want to compare them for your situation, let’s run the numbers together.
Until next time.
The 2026 IRS standard mileage rate for business use is published in the IRS Notice released in late December 2025. For historical context, the rate was 67¢ per mile in 2024 and 70¢ per mile in 2025 (per IRS Notice 2025-5). Confirm the current 2026 rate at irs.gov/standard-mileage-rates.
For most small business owners with a typical car or light truck, the standard mileage rate wins on simplicity and often on math. For business owners driving heavy work trucks, vans loaded with equipment, or high-maintenance vehicles, actual expenses usually produce a larger deduction. Once you pick actual expenses for a specific vehicle, you cannot switch back to standard mileage on that vehicle.
No. The drive between your home and your regular place of business is personal commuting and is not deductible, even if you carry business materials. Business mileage starts when you travel from one work location to another (client site, supplier, bank). If you have a qualified home office as your principal place of business, miles from home to a client site count as business miles.
The IRS requires contemporaneous records for each business trip: date, destination, business purpose, and miles. A reconstructed log built at year end is generally rejected in an audit. Use a GPS-based mileage tracking app (MileIQ, Everlance, QuickBooks Self-Employed) to capture trips automatically.
Yes. Under an accountable plan, reimbursements at or below the IRS standard mileage rate are tax-free to the employee and deductible to the business. The plan requires three things: business connection, contemporaneous substantiation, and return of any excess reimbursement. Reimbursements above the IRS rate become taxable wages on the excess amount.
Adam Traywick, CPA is the President and founding CPA of Adam Traywick, LLC, a Fort Worth small-business accounting firm. He has over 20 years of experience helping small business owners across home-services trades, hair salons, real estate, and insurance agencies optimize taxes, run cleaner books, and avoid the surprises that come from once-a-year accountants.
