Mileage Deduction for Side Gigs, Standard Rate vs Actual Costs
For delivery drivers, rideshare drivers, and anyone whose side business involves driving, the car is often the biggest expense. The IRS allows self-employed people to deduct the business use of a car using one of two methods: the standard mileage rate or actual expenses. For 2026 there is an unusual wrinkle: the standard rate changed in the middle of the year.
1. The 2026 standard mileage rates
The IRS's standard mileage rate table lists two business rates for 2026:
| Period | Business rate |
|---|---|
| January 1 to June 30, 2026 | 72.5 cents per mile |
| July 1 to December 31, 2026 | 76 cents per mile |
For comparison, the 2025 business rate was 70 cents per mile. Topic 510 notes that for 2026 there are different standard mileage rates for the first and second halves of the year. That means your mileage log needs dates, not just a yearly total.
2. A worked example
Suppose a delivery driver logs 3,000 business miles from January through June and 3,500 business miles from July through December.
| Period | Miles | Rate | Deduction |
|---|---|---|---|
| Jan to Jun | 3,000 | $0.725 | $2,175 |
| Jul to Dec | 3,500 | $0.76 | $2,660 |
| Total | 6,500 | $4,835 |
Parking fees and tolls for business trips are deductible separately, whether you use the standard rate or actual expenses, according to Topic 510.
3. Which miles count, and which do not
Publication 463 is firm about commuting: you cannot deduct the cost of driving between your home and your main or regular place of work, no matter how far it is, and even if you work during the trip. Those are personal commuting expenses.
What generally does count for a self-employed person is driving from one business location to another, to meet clients, to pick up supplies, or between temporary work locations. Publication 463 includes a chart of which trips are deductible; for example, trips between your regular or main job and a temporary work location are always deductible.
4. The actual expense method
Instead of a per-mile rate, you can deduct the business share of what the car actually costs. Topic 510 lists gas, oil, repairs, tires, insurance, registration fees, licenses, and depreciation or lease payments, multiplied by the share of total miles that were for business. If you drove 6,500 business miles out of 13,000 total, half of those costs would be the business portion.
Actual expenses can produce a larger deduction for a costly vehicle or one with high operating costs, but they require keeping every receipt plus a mileage log.
5. Rules for choosing the standard rate
Topic 510 sets conditions. To use the standard mileage rate for a car you own, you must choose it in the first year the car is available for use in your business. In later years you can choose either method. If you lease, choosing the standard rate means using it for the entire lease period, including renewals.
You also cannot use the standard rate if you operate five or more cars at the same time, or if you previously claimed certain depreciation on the car, such as accelerated (MACRS) depreciation, a Section 179 deduction, or the special depreciation allowance.
A practical point follows from these rules: if you are unsure which method will be better over time, starting with the standard rate in the first year keeps both options open later for a car you own.
6. Comparing the two methods for one car
Topic 510 suggests that if you qualify for both methods, you figure the deduction both ways before choosing. For the 6,500 business miles in the example, the standard rate gives $4,835. To compare, total a year of actual costs, multiply by the business-use share, and add depreciation as allowed. If the actual-expense figure is not clearly higher, the standard rate is simpler to support.
7. Records you need
The IRS requires you to substantiate expenses with adequate records or sufficient evidence. For mileage, that means a log with the date, destination, business purpose, and miles for each trip, plus your total miles for the year. With two rates in 2026, the dates are what let you split miles correctly between the halves of the year.
8. Key takeaways
- The 2026 business standard mileage rate is 72.5 cents for January through June and 76 cents for July through December.
- 3,000 first-half miles plus 3,500 second-half miles produce a $4,835 deduction.
- Commuting between home and a regular place of work is never deductible.
- The actual expense method uses the business share of gas, repairs, insurance, depreciation, and similar costs.
- Choose the standard rate in a car's first business year to keep both methods available later; leased cars must stick with it.