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Even during those times when you don't have to worry about gas and oil change prices rising exponentially, driving is still a costly endeavor. It can get especially pricey if you drive for work, as being on the road more often (and for longer) invariably results in more gas station stops and trips to the mechanic. Fortunately, changes to Internal Revenue Service tax rules as of July 2026 could help you save a little bit more money during tax season, based on the amount you pay at the pump while driving your work vehicle.
On July 13, the IRS announced that it had increased the standard mileage rates for business vehicles. The optional mileage rate for business vehicles has increased by 3.5 cents to 76 cents per mile. It also increased medical and moving-related vehicle mileage to 23.5 cents per mile from 20.5 cents. The IRS explained that this shift is in response to fuel price hikes, and that the new rates will apply for fuel costs incurred between July 1 and the end of the year. Thus, the change will impact federal income tax filings next year.
It should be stated plainly that those who use a work vehicle, pay for gas themselves, and are reimbursed for mileage by their employer can't take advantage of this rate increase, nor can those who receive W-2s in general. Meanwhile, those who are considered self-employed or business owners — freelancers, gig workers, and the like — in the eyes of the law can benefit from this change, alongside a host of other deductions.
Read more: 5 Additives That Can Actually Increase Your Engine's Performance & Lifespan
Other business vehicle-related deductions to know
Self-employed or business-owning drivers can deduct much more than fuel costs when filing their taxes. Common travel expenses like tolls, parking costs, repairs, and registration and maintenance fees can all save you some money on your taxes, to an extent. The important thing is calculating what percentage of your vehicle's total expenses are actually business-related. This requires adding up all of your costs throughout the tax year and multiplying that by the percentage of miles driven purely for business reasons. Thankfully, there are plenty of great apps for tracking vehicle mileage you can use for this purpose.
So, to file your taxes properly while maximizing your deductions, you need to keep extensive, thorough records of all of your write-offs. Receipts, bank statements, travel logs, and more are necessary to paint a full picture of your business vehicle's expenses. This can help you or a tax professional get everything filed correctly. Otherwise, you may have a rough post-tax season, as extensive deductions and claiming high business use on a single vehicle could trigger an IRS audit. Should that happen, you'll want to have your affairs in order so you can defend yourself.
Even if you go for a budget-friendly vehicle for your business, the cost of gas, tolls, and repairs will add up all the same. The IRS' decision to increase mileage rates should be a big help to business drivers, providing some welcome breathing room amidst high fuel prices.
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Read the original article on SlashGear.
