2026 Business Mileage Rate Increase: What the New 72.5¢ Rate Means for Business Owners, Creators, and Professionals

The IRS has announced an increase to the 2026 standard mileage rate for business use, raising it to 72.5 cents per mile, up 2.5 cents from 2025. While this may sound like a small adjustment, for many California business owners, professionals, and self-employed individuals, this change can have a meaningful impact on annual tax deductions.

At Velin & Associates, Inc., we regularly help clients evaluate whether the standard mileage method or actual expense method delivers the greatest tax benefit. This update is especially relevant for clients who rely heavily on their vehicles to generate income — from online creators and Amazon sellers to medical and dental practices.

Below, we break down what this change means, who benefits most, and how to use it strategically.

What Is the Standard Mileage Rate?

The standard mileage rate allows taxpayers to deduct a fixed amount for every business mile driven instead of tracking actual vehicle expenses such as gas, repairs, insurance, and depreciation.

For 2026, the rates are:

• 72.5¢ per mile for business use
• 20.5¢ per mile for medical purposes
• 20.5¢ per mile for moving (certain military and intelligence community members only)
• 14¢ per mile for charitable use

These rates apply to gasoline, diesel, hybrid, and fully electric vehicles.

Why the Increase Matters in Real Dollars

An increase of 2.5 cents per mile adds up quickly.

Example: Online Creator or YouTuber

A CPA for YouTubers often helps creators track miles driven for:

• Studio rentals
• Brand meetings
• Equipment purchases
• Travel to filming locations

If a YouTuber drives 15,000 business miles in 2026, the deduction would be:

• 15,000 × $0.725 = $10,875 deduction

That’s $375 more than in 2025 — just from the rate increase.

Who Benefits the Most from the 2026 Rate?

Shopify Store Owners & Online Commerce Businesses

Clients who operate e-commerce businesses often drive for:

• Inventory pickups
• Shipping logistics
• Supplier meetings
• Warehouse visits

As a Shopify Store CPA and CPA for Online Commerce, we often see mileage deductions become one of the most overlooked tax savings.

Example:
A Shopify store owner driving 20,000 business miles could deduct $14,500 in 2026.

Amazon Business Owners (Including FBA Sellers)

Even Amazon FBA sellers with minimal California presence often incur vehicle use:

• Transporting inventory to prep centers
• Visiting storage facilities
• Meeting accountants, attorneys, or lenders

As an Amazon Business CPA, we help clients document mileage properly to support deductions while remaining audit-ready.

Medical & Dental Professionals

Doctors and dentists frequently qualify for mileage deductions when travel is:

• Between multiple office locations
• To hospitals or surgical centers
• For continuing education

Example:
A dentist operating two locations in Los Angeles driving 10,000 miles annually can deduct $7,250 using the 2026 rate.

This is especially valuable for CPA for Dental Practice, Dentist CPA, CPA for Doctors, and CPA for Medical Practice clients.

Standard Mileage vs. Actual Expenses: Which Is Better?

The mileage rate is optional. Some clients benefit more from the actual expense method, which includes:

• Gas
• Repairs
• Insurance
• Registration
• Depreciation

Important Rule to Know

If you own a vehicle and want to use the standard mileage method, you must choose it in the first year the vehicle is placed in service for business.

Once that first year passes, your options may be limited.

At Velin & Associates, we often run side-by-side calculations before filing to determine the best approach.

Leased Vehicles: Special Considerations

If you lease a vehicle and choose the standard mileage method, you must:

• Use it for the entire lease term, including renewals

Switching methods mid-lease is not allowed.

This is a common issue we review for high net worth individuals, executives, and professionals with luxury or electric vehicles.

Recordkeeping: The Key to Defending the Deduction

Mileage deductions are one of the most frequently audited areas.

We advise clients to:

• Track miles contemporaneously
• Maintain logs with date, destination, and business purpose
• Separate personal and business use

This applies equally to CPA for TikTokers, CPA for Filmmakers, creators, and traditional businesses.

Strategic Planning for 2026

Mileage deductions don’t exist in isolation. They interact with:

• Entity structure (LLC, S-Corp)
• Accountable plans
• Reimbursement strategies
• High-income phaseouts

For high net worth individuals, proper mileage planning can also support broader tax strategies and substantiation during audits.

How Velin & Associates Helps

At Velin & Associates, Inc., we don’t just apply IRS rates — we integrate them into a broader tax planning strategy tailored to your industry and income profile.

We help clients:

• Choose the optimal mileage method
• Implement compliant tracking systems
• Avoid costly audit mistakes
• Maximize deductions without increasing risk

Final Thoughts

The 2026 mileage rate increase to 72.5 cents per mile is good news for business owners who depend on their vehicles. However, maximizing the benefit requires planning, documentation, and strategic decision-making.

Whether you’re a creator, medical professional, online seller, or high-income business owner, this is an opportunity to improve after-tax cash flow — if handled correctly. For more information about our tax planning services, contact us today: visit our website.

Velin & Associates, Inc

8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org

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