How the business mileage deduction works in 2026

What is the 2026 standard mileage rate?

The IRS set the 2026 business rate at 72.5 cents per mile in Notice 2026-10. In Announcement 2026-11, citing higher fuel prices, it raised the rate for the rest of the year. The revised rate applies to expenses paid or incurred on or after July 1, 2026.

Because of the mid-year change, your mileage log for 2026 needs to show which miles fell in each half of the year.

What counts as business driving

Business miles are trips you make for your freelance work. Common examples:

• Driving from one client to another.
• Going to a client meeting, job site or event for your business.
• Running business errands, such as picking up supplies or going to the post office for client shipments.
• Trips from your home to other work locations, if your home is your principal place of business.

Commuting is not deductible

Driving between your home and your main or regular place of work is personal commuting, no matter how far it is or whether you take work calls on the way. If you rent a desk in a coworking space and that is your regular place of work, the drive there is commuting. Parking fees at your regular workplace are also commuting costs.

Your home office changes this. If your home is your principal place of business, trips from home to another work location in the same business are deductible, regardless of distance. Without a qualifying home office, it depends on where you work. If you have a regular work location away from home, such as a rented desk, the round trip from home to a temporary work location in the same business is deductible regardless of distance. If you have no regular office at all, the trip from home to your first business stop in your metro area and the trip home from your last one are commuting, but driving from one client to another is deductible. See the home office deduction guide for the tests.

Two methods

Standard mileage rate

Multiply business miles by the rate. On top of that, you can deduct business parking fees and tolls, and the business share of interest on a car loan. The rate replaces gas, insurance, repairs, depreciation and the other operating costs, so you don't deduct those separately.

Rules to know:

• For a car you own, you must choose the standard rate in the first year the car is available for use in your business. After that, you can choose either method each year.
• For a leased car, if you choose the standard rate you must use it for the entire lease.
• You can't use it if you use five or more cars in the business at the same time.

Actual expenses

Add up the year's car costs: gas, oil, tires, repairs, insurance, registration and licenses, garage rent, lease payments or depreciation, parking and tolls. Multiply the shared costs by your business-use percentage, which is business miles divided by total miles. This method takes more record keeping, and depreciation has its own limits and rules in Publication 463. If you switch from the standard rate to actual expenses in a later year, you must use straight-line depreciation for the car.

Worked example

You drive 12,000 miles in 2026, of which 7,000 are business miles: 3,000 between January and June and 4,000 between July and December. You also pay $180 in business parking and tolls. Your car costs for the year are $2,100 of gas, $1,500 of insurance, $600 of repairs, $200 of registration, and an assumed $3,000 of depreciation for illustration only.

In this example the standard rate gives $898.33 more. The answer flips for some drivers, often those with expensive vehicles or high operating costs and few total miles. Either deduction lowers Schedule C net profit, so it reduces both income tax and self-employment tax.

Records you must keep

The IRS expects a written or electronic record made at or near the time of each trip. A weekly log that accounts for the week's driving counts as timely. For car expenses, record:

• Mileage for each business trip and the date.
• The destination of each trip.
• The business purpose, such as the client or task.
• Total miles for the year. Odometer readings at the start and end of the year are an easy way to get this.
• The date you started using the car for business, and its cost and improvements if you use actual expenses.
• Receipts for parking, tolls and, under the actual method, every car expense.

A mileage app or a simple spreadsheet both work if they capture these details. Reconstructing a year of driving from memory at tax time is weak evidence if the IRS asks.

Where it goes on your return

Freelancers report car expenses on Schedule C, with vehicle details in Part IV or on Form 4562 if you claim depreciation. To see what the deduction does to your tax, enter your lower net profit in the self-employment tax calculator, and adjust your remaining payments with the quarterly estimated tax calculator. If driving is a big part of your work, include it as a cost in the freelance rate calculator.

If you use several vehicles, mix personal and business use heavily, or are deciding which method to elect for a new car, a tax professional can check the long-term effect of that first-year choice.