Updated October 21, 2026
The Deduction That Looks Like Simple Math and Isn’t
Multiply your business miles by a rate. That’s the pitch, and for a lot of people it really is that simple. But three things hide underneath. The rate itself changed partway through 2026, so “just multiply” now needs an extra step. The method you pick your first year with a vehicle can lock you in for as long as you own it, whether you realized you were making a permanent choice or not. And whether the drive from your house to a job site counts at all depends on how your business is set up, which surprises a lot of tradespeople in both directions.
Short version: The 2026 business mileage rate is 72.5 cents per mile for January through June and 76 cents from July 1 on, so your log needs a split at June 30. You can deduct actual vehicle costs instead, but whichever method you use in a vehicle’s first year controls your options for that vehicle from then on, and it ties directly to the choices in our depreciation guide. Driving from home to a job site can be deductible, but only if you have a regular work location elsewhere, a qualifying home office, or the job is outside your metro area.
The 2026 Rate Split You Have to Track Separately
The IRS normally sets the mileage rate once a year and leaves it alone. Rising fuel costs pushed it to do something rare in 2026: raise it mid-year. The business rate was 72.5 cents per mile from January 1 through June 30, then went to 76 cents from July 1 through December 31, a record high.
That means your mileage log needs a split at June 30: one total for the first half of the year, one for the second, each multiplied by its own rate. Lump the whole year at one rate and you’re either shortchanging yourself or overstating the deduction, and either one is easy to spot when someone checks a mileage log against the calendar.
Real numbers: drive 5,000 business miles in each half of 2026, and you deduct $3,625 for the first half (5,000 × $0.725) and $3,800 for the second (5,000 × $0.76), for $7,425 total. That’s $175 more than if you applied the old rate to the whole year.
Two Ways to Deduct, and the Choice That Locks In Before You Realize It’s a Choice
You have two options for deducting vehicle use: the standard mileage rate covered above, or the actual expense method, which means deducting the real cost of gas, insurance, repairs, and depreciation, multiplied by your business-use percentage.
Here’s the part that catches people off guard. To use the standard mileage rate on a car you own, you have to choose it in the first year the vehicle is available for use in your business. Use the standard rate in year one, and you can switch to actual expenses in a later year (you then have to depreciate the vehicle straight-line, an even amount each year, over its remaining useful life). Use actual expenses in year one, and the standard rate is off the table for that vehicle for good. Leased vehicles are stricter still: if you pick the standard rate on a lease, you have to use it for the whole lease, renewals included.
This connects directly to the depreciation guide. The IRS doesn’t allow the standard rate on a vehicle once you’ve claimed Section 179, bonus depreciation, or regular accelerated depreciation on it, since the standard rate already has depreciation built in. So the decision to fully write off a new work truck in year one isn’t separate from the mileage method. It’s the same decision. Choose Section 179 on that truck, and you’ve chosen actual expenses on it permanently.
Two more limits: the standard rate isn’t allowed if you run five or more vehicles at the same time, like a fleet. And if you’re a W-2 employee driving for your employer, you generally can’t deduct unreimbursed mileage at all on your federal return. This deduction is for the self-employed, and for your employer’s reimbursement policy if you’re on payroll.
What’s Already Baked Into the Standard Rate
The standard rate is built to cover the whole cost of running the vehicle: gas, insurance, maintenance, repairs, and a depreciation component, all rolled into one number per mile. You don’t track any of those separately.
A few things stay deductible on top of the standard rate, since they’re not included in it: parking fees and tolls for business trips, the business-use share of interest on a vehicle loan (for self-employed people), and the part of your registration that’s a personal property tax based on the vehicle’s value, if your state charges one. Everything else is already in the per-mile number.
What the Actual Expense Method Involves
Actual expenses means tracking every real cost (gas, insurance, repairs, maintenance, registration, tires, and depreciation), then applying your business-use percentage to the total. If you drove the vehicle 70% for business, you deduct 70% of every one of those costs.
It takes a lot more recordkeeping than standard mileage: every receipt, plus total miles versus business miles for the year to get that percentage. Where it earns the extra work: a vehicle with high costs, a bad year for repairs, expensive insurance, or a heavy truck you plan to write off through Section 179 and bonus depreciation, since that upfront write-off is often far bigger than the depreciation built into the standard rate. Remember that Section 179 and bonus also require more than 50% business use, as the depreciation guide explains.
When the Drive From Home Counts, and When It Doesn’t
The baseline rule is simple and unforgiving: driving from home to your regular place of work is a commute, and commuting is never deductible, no matter how far it is or what you’re hauling. Carrying tools or having your business name on the door doesn’t change that.
The trickier question for trade work is the drive to a temporary job site, one that’s realistically expected to last (and does last) a year or less. A lot of mileage advice says that drive is always deductible. It isn’t. Under the IRS’s own ruling on this (Revenue Ruling 99-7), the drive from home to a temporary job site counts as business mileage only in one of three situations:
- The job site is outside the metro area where you live and normally work. That drive is deductible even without a shop or home office.
- You have a regular work location away from home, like a shop or yard you report to. Then trips from home to a temporary job site are deductible regardless of distance.
- Your home is your principal place of business. If a space in your home is used regularly and only for the business, and it’s where you handle the admin side (quotes, invoices, scheduling, bookkeeping) with no other fixed location where you do that, every drive from your front door to a job site, customer, or supplier becomes a business trip.
If none of those apply, say you’re a solo contractor with no shop and no qualifying home office, then driving from home to a temporary job site inside your own metro area is treated as a commute. The first drive of the day and the last drive home don’t count. Everything in between still does, though: job site to job site, job site to the supply house, supplier to a customer.
This is why the home office question matters so much for trade work. A mobile mechanic working out of a truck, for example, can turn every customer trip into deductible miles with a home office that qualifies. The home office deduction guide covers whether your setup qualifies and how to claim it, and running a business from home covers the zoning and insurance side.
If You’re Driving for an App Instead of a Trade Business
Gig driving is a different situation, since the car is closer to being your actual workplace. Many tax pros treat miles driven while you’re logged in and waiting for orders or rides as business miles, not just the miles during an active trip. The IRS hasn’t put out gig-specific rules on this, so log those miles clearly and separately, and keep the app’s own mileage reports as backup, since they usually count only miles on active trips. Best delivery apps to make money and how to make money with rideshare both cover the gig side in more detail.
To see this math worked through for a single shift, cash in hand versus what’s actually yours once the mileage deduction and self-employment tax are factored in, try the rideshare take-home calculator. The standard-vs-actual choice, the first-year lock-in, and the recordkeeping rules all apply the same way to gig drivers.
Keeping a Record That Holds Up
Whichever method you use, the IRS wants records made at or near the time of the trip, not rebuilt from memory the week before you file. For each business trip, write down the date, where you went, the business purpose, and the miles. Also record your odometer at the start and end of the year, since your total miles are how you prove your business-use percentage. A notebook in the glovebox works as well as an app. What matters is that it exists and was kept close to real time.
Your mileage deduction lowers both income tax and self-employment tax, which the 1099 tax realities guide walks through. Factor it into your quarterly estimated payments too, so a high-mileage year doesn’t leave you overpaying all year.
The Short of It
For most trade businesses, starting a vehicle on the standard mileage rate keeps your options open. Check how your setup handles the drive from home: a shop you report to or a qualifying home office can make far more of your driving deductible, and without either, local job sites count only after your first stop. And if a big truck purchase and a Section 179 write-off are on the table, know going in that the mileage method and the depreciation choice are the same decision.
Related Guides
- Business depreciation: Section 179, bonus depreciation, and vehicle caps.
- Home office deduction: the setup that makes trips from home deductible.
- Equipment financing: paying for a work truck or van.
- Rideshare take-home calculator: mileage math for gig drivers.
This article is for general informational purposes only and isn’t financial, legal, insurance, or tax advice. For guidance specific to your situation, talk to a licensed professional.
Frequently Asked Questions
72.5 cents per mile for January through June 2026, and 76 cents per mile from July 1 through December 31, after a rare mid-year increase. Your mileage log needs a split at June 30 so each half of the year gets the right rate.
It depends on which one you use first. If you use the standard rate in the vehicle’s first business year, you can switch to actual expenses later, using straight-line depreciation from then on. If you start with actual expenses, you can’t use the standard rate on that vehicle later. Leased vehicles on the standard rate must stay on it for the whole lease.
Yes. The standard mileage rate isn’t allowed on a vehicle once you’ve claimed Section 179, bonus depreciation, or accelerated depreciation on it. Choosing to write off a truck that way means you’ve chosen actual expenses on that truck permanently.
Not if it’s your regular workplace. For a temporary job site (expected to last a year or less), it’s deductible if the site is outside your metro area, if you also have a regular work location like a shop, or if your home is your principal place of business. Otherwise, the first trip of the day and the last trip home count as commuting, though trips between job sites still count.
Business parking fees and tolls, the business share of vehicle loan interest if you’re self-employed, and the personal property tax part of your registration, if your state charges one. None of those are included in the per-mile rate.
Most can’t deduct unreimbursed work mileage on their federal return. A few groups are exceptions, such as Armed Forces reservists and certain performing artists and government officials. The deduction is mainly for the self-employed. If you’re on payroll, ask about your employer’s mileage reimbursement policy.
Records made at or near the time of each trip, showing the date, destination, business purpose, and miles, plus your odometer reading at the start and end of the year. A simple notebook is fine as long as it’s kept close to real time rather than rebuilt later.
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