Mileage deductions can save taxpayers significant money, but eligibility rules have changed. With the One Big Beautiful Bill Act (OBBBA) making permanent adjustments, it’s essential to know whether you qualify for vehicle-related deductions in 2025 and 2026.
How the Rules Have Changed
Employees can no longer deduct unreimbursed business mileage due to the permanent suspension of miscellaneous itemized deductions. However, self-employed individuals can still deduct qualified business mileage, excluding commuting. Employer reimbursements under accountable plans remain tax-free.
Business Mileage for the Self-Employed
Self-employed taxpayers may deduct vehicle expenses directly from self-employment income. Trips to customer locations generally qualify, while commuting does not.
Other Eligible Vehicle Uses
- Moving – Deductible only for certain military families through 2025, with intelligence community members added in 2026.
- Medical – Mileage for medical appointments is deductible if total medical expenses exceed 7.5% of AGI.
- Charitable – Mileage for charitable purposes remains deductible, with a new 0.5% AGI floor beginning in 2026.
Standard Mileage Rates
Taxpayers may use IRS standard mileage rates instead of tracking actual expenses.
- Business: 70¢ (2025), 72.5¢ (2026)
- Moving: 21¢ (2025), 20.5¢ (2026)
- Medical: 21¢ (2025), 20.5¢ (2026)
- Charitable: 14¢ (2025 & 2026)
Parking fees and tolls may also be deducted when using the standard mileage method.
Importance of Recordkeeping
The IRS requires detailed records to substantiate mileage deductions. A mileage log noting date, purpose, destination, and miles driven is the simplest way to ensure compliance.
Maximizing Deduction Opportunities
Self-employed taxpayers and those who itemize are most likely to benefit. Consider whether your expenses exceed deduction floors and explore new opportunities, such as the auto loan interest expense deduction for vehicles purchased in 2025 or 2026.
Conclusion
Mileage deductions remain valuable for self-employed individuals and certain itemizers. With evolving rules under the OBBBA, careful planning and documentation are key to maximizing your tax benefits in 2025 and 2026.