Mileage Rate Increase for Business Use of Car—2nd Half of 2026

Taxpayers look for tax deductions to employ to reduce their federal income tax due. One of the most common means to reduce tax obligations is to claim a business expense. Under USCA Section 162, that is, the Code or Internal Revenue Code, a very common deduction for business expenses is the use of a vehicle, such as an auto, for business purposes.

Taxpayers who qualify for this Code Section 162 deduction have two alternatives to claim the expense deduction. One approach is to keep track of the expenses related to the vehicle, such as the cost for gas, oil, repairs, insurance, etc. In turn, the portion of these autos expenses related to business can normally be claimed as a business deduction.

Thus, as an example, if the total mileage for the year on the vehicle was 20,000 miles, with 15,000 miles documented for business use of the vehicle, the taxpayer would claim 15,000/20,000 miles, that is, 75% as business use. In turn, if the expense for the auto totaled $24,000 dollars (including allowed depreciation), the taxpayer would claim 3/4th of this amount as a business expense.

Alternatively, Congress, under Code Section 162, allows the taxpayer to claim a given amount for each business mile driven.

Using the above example, there would be 15,000 miles of business use of the vehicle. In turn, the taxpayer claims an amount per business mile driven.

This amount changes as the IRS acts under the law to set the rate per mile each year or part of a year.

The rate for the first one half of 2026 was 72.5 cents per business mile. That rate was recently changed to allow for the second half of 2026, a deduction of 76 cents per mile for qualified business use of the vehicle. (For the details of this Announcement by the IRS-- and for other vehicles, see Announcement 2026-11, 2026-29 I.R.B. 49.

For more on this issue and other deductions for mileage for medical expense, charity, etc., see Levine, Mark Lee, and Segev, Libbi Levine, Chapter 13, Real Estate Transactions, Tax Planning (Thomson/Reuters/West 2026).