Business Mileage Deduction 2026: Standard Rate vs. Actual Expenses

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 two things hide underneath that simple math. The rate itself split partway through 2026, so “just multiply” now needs an extra step. And the method you pick your very first year with a vehicle can lock you into it for as long as you own that vehicle, whether you realized you were making a permanent choice or not.

Short version: The 2026 business mileage rate is 72.5 cents per mile for January through June, and 76 cents from July 1 onward, a rare mid-year change, so your log needs a split at June 30. You can deduct actual vehicle expenses instead of the standard rate, but whichever one you use in year one determines your options for that vehicle going forward, and it connects directly to the depreciation choice covered in our depreciation guide. And a lot of what you’d assume is a non-deductible commute, driving from home to a job site, often isn’t, especially for project-based trade work.

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 them to do something rare in 2026: raise it mid-year. The rate was 72.5 cents per mile from January 1 through June 30, then jumped to 76 cents from July 1 through December 31.

That means your mileage log needs an odometer split at June 30, one total for the first half of the year, one for the second, each multiplied by its own rate. Skip the split and lump the whole year at one rate, and you’re either shortchanging yourself or overstating the deduction, and either one is visible to anyone who actually looks at a mileage log against the calendar.

Real numbers: drive 5,000 business miles in each half of 2026, and you’d 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, $175 more than if you’d mistakenly 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, 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. Whichever method you use in the first year you place a vehicle into business service determines your flexibility for the rest of that vehicle’s life. Use the standard mileage rate in year one, and you can switch to actual expenses in a later year if it becomes more advantageous. Use actual expenses in year one, and you’re generally locked into actual expenses for that vehicle going forward, standard mileage is off the table permanently.

This connects directly to the depreciation guide: Section 179 and bonus depreciation are only available under the actual expense method, since the standard mileage rate already has a depreciation component baked into it. So the decision to fully expense a new work truck in year one isn’t a separate decision from the mileage method, it’s the same decision. Choosing to write off the truck through Section 179 means you’ve also chosen actual expenses for mileage purposes on that truck, for good.

What’s Actually 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 separately deductible even under the standard rate, since they’re not included in it: parking fees and tolls for business trips, the business-use portion of any loan interest on the vehicle, and the personal property tax portion of your registration, if your state charges one based on the vehicle’s value. Everything else is already in the per-mile number.

What Actual Expenses Actually Involves

Actual expenses means tracking every real cost, gas, insurance, repairs, maintenance, registration, 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 requires meaningfully more recordkeeping than standard mileage, keeping every receipt, tracking total miles versus business miles for the year to calculate that percentage. Where it earns that extra work: a vehicle with genuinely high costs, a bad year for repairs, high insurance, or a vehicle being fully expensed through Section 179 and bonus depreciation as covered in the depreciation guide, since that upfront write-off is often larger than what the standard mileage rate’s built-in depreciation component would give you.

The Drive That Might Not Be a Commute At All

The baseline rule is simple and unforgiving: driving from home to your regular, fixed place of work is a commute, and commuting is never deductible, no matter how far it is or what you’re hauling in the truck. Carrying tools or having your business name on the door doesn’t change that.

But two real exceptions matter a lot for trade work specifically, and one of them is bigger than most people realize.

The temporary work location exception. If you’re driving to a job site you expect to work at for less than a year, that drive is deductible from day one, even without a home office. A three-week bathroom remodel, a wiring job on new construction, a seasonal install run, these are exactly the kind of temporary assignments this exception was built for. A lot of trade work already qualifies without anyone realizing it.

The home office exception. If your home qualifies as your principal place of business (regular, exclusive use, where you handle the administrative side of running things), every drive from your front door to a job site or client becomes a deductible business trip instead of a commute. Without a home office, only your first and last trip of the day are off-limits, everything in between, job site to job site, supplier run to client visit, is deductible regardless.

Whether your specific setup actually qualifies as a home office, and how to claim it correctly, is its own topic, coming up next in this hub.

If You’re Driving for an App Instead of a Trade Business

Everything above about commuting assumes a fixed job site or a home office, the two things that don’t really apply if you’re driving for a delivery or rideshare app instead of running a trade business. Gig driving works differently: your vehicle is closer to your actual workplace, so mileage generally counts as business use from the moment you’re online and available for orders or rides, not just the miles during an active delivery or trip. Best Delivery Apps to Make Money and How to Make Money with Rideshare both cover that specific version of the rule.

If you want to see this exact math worked through for a single shift, cash in pocket versus what’s actually yours once this deduction and self-employment tax are both factored in, the rideshare take-home calculator does that calculation directly.

The standard-mileage-vs-actual-expenses choice, the first-year lock-in, and the recordkeeping requirements above apply the same way either way, it’s only the commuting section that’s built for a different situation than yours.

Keeping a Record That Actually Holds Up

Whichever method you use, the IRS requires contemporaneous records, meaning logged at or near the time the trip happens, not reconstructed from memory the week before you file. For each trip: the date, the destination or business purpose, and the mileage. A simple notebook works as well as an app, what matters is that it exists and was kept close to real time, not built after the fact from a hazy memory of a busy year.

Putting It Together

For most trade businesses, starting with the standard mileage rate keeps your options open, and it’s worth actively checking whether temporary work sites are already making more of your driving deductible than you’ve been claiming. If a major vehicle purchase and a full Section 179 write-off are in the picture, know going in that the mileage method decision and the depreciation decision are the same choice, not two separate ones.

Frequently Asked Questions

72.5 cents per mile for January through June 2026, and 76 cents per mile from July 1 through December 31, a rare mid-year increase. Your mileage log needs a split at June 30 to apply the correct rate to each half of the year.

It depends on which one you use first. If you start with the standard mileage rate in the vehicle’s first year of business use, you can switch to actual expenses later. If you start with actual expenses, you’re generally locked into that method for that vehicle going forward.

Yes. Section 179 and bonus depreciation are only available under the actual expense method, so claiming them in a vehicle’s first year of business use also means you’ve chosen actual expenses for mileage purposes on that vehicle permanently.

Usually not, if it’s a regular, fixed workplace, that’s a commute. But if the job site is expected to last less than a year, it’s generally deductible as a temporary work location, even without a home office. With a qualifying home office, every trip from home to a work location becomes deductible.

Parking fees, tolls, the business-use portion of vehicle loan interest, and the personal property tax portion of registration, if applicable, are all separately deductible on top of the standard rate, since none of those are included in the per-mile amount.

The IRS requires contemporaneous records, logged at or near the time of each trip, showing the date, destination or business purpose, and mileage. A simple notebook is fine as long as it’s kept close to real time rather than reconstructed later.

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