The IRS Mileage Rate for 2026: Standard Mileage vs. Actual Expenses

If you drive for business, you have a deduction available. The question is which method to use — the IRS standard mileage rate or actual vehicle expenses — and whether you’re documenting it well enough to survive scrutiny. Vehicle expenses are one of the most commonly examined deductions in small business audits because of the personal-use component.

The 2026 Standard Mileage Rate

For 2026, the IRS standard mileage rate for business driving is 72.5 cents per mile. That means if you drive 15,000 business miles, your deduction is $10,875. The rate covers gas, depreciation, insurance, repairs, and maintenance — everything except parking and tolls, which are deducted separately.

The standard rate is simple. Multiply business miles by 72.5 cents. But simple doesn’t always mean better. If you drive an expensive vehicle or have high maintenance costs, actual expenses might produce a larger deduction.

Actual Expense Method

The actual expense method lets you deduct the business-use percentage of all vehicle costs: gas, oil changes, tires, insurance, registration, lease payments or depreciation, repairs, and maintenance. You calculate the percentage by dividing business miles by total miles driven for the year.

This method requires significantly more recordkeeping. You need to track every vehicle expense and maintain a mileage log that distinguishes business from personal use. But for vehicles with high operating costs, it can produce a substantially larger deduction than the standard rate.

Which Method Should You Use?

There’s an important restriction: if you want to use the standard mileage rate for a vehicle you own, you generally must choose it in the first year the vehicle is placed in business service. If you start with actual expenses, you can switch to standard mileage later — but if you start with standard mileage, switching to actual expenses has limitations, particularly around depreciation.

For most service-based business owners who drive a moderately priced vehicle, the standard mileage rate is simpler and produces a competitive deduction. For contractors who put heavy miles on trucks with high fuel and maintenance costs, actual expenses often win. Run both calculations for your first year to see which is higher.

The Documentation That Matters

Regardless of which method you choose, you need a contemporaneous mileage log. That means recording the date, destination, business purpose, and miles driven at or near the time of each trip. A log reconstructed at year-end from memory is not contemporaneous and will not hold up during an examination.

A mileage tracking app that logs trips automatically is the easiest solution. MileIQ, Everlance, or even a simple spreadsheet updated weekly will work. The key is consistency — if you have 200 logged trips and your Schedule C claims 250, the IRS will question the other 50.

The 100% Business Use Claim

Claiming 100% business use on a vehicle you also use personally is one of the fastest ways to attract scrutiny. Unless you have a dedicated business vehicle that never leaves a job site, the IRS assumes there’s personal use. A realistic business-use percentage — supported by your mileage log — is far more defensible than a round number that doesn’t match reality.

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If you need help setting up mileage tracking or figuring out which method produces a better result for your situation, schedule a consultation or learn about our bookkeeping services.