If you drive between client meetings, job sites, rental properties or supply runs here in Hawaiʻi, 2026 has one extra wrinkle: the IRS changed the business mileage rate in the middle of the year. A year-end odometer total alone will not show how many miles belong at each rate.

The quick answer

January 1–June 30, 2026 72.5¢ per business mile

Use the original 2026 rate for deductible business transportation expenses paid or incurred before July 1.

July 1–December 31, 2026 76¢ per business mile

Use the revised rate for deductible business transportation expenses paid or incurred beginning July 1.

The standard mileage rate is optional. A taxpayer who qualifies may instead calculate the deductible business-use share of actual vehicle expenses, but the method-selection rules discussed below still matter.

How to calculate a split-year deduction

Separate the miles by date, multiply each group by its applicable rate, and then add the results.

Business-related parking fees and tolls may generally be deductible in addition to the standard mileage amount. Commuting between your home and regular workplace is personal travel and is not converted into business mileage merely because you keep a log.

Your log needs more than a mileage total

The substantiation rules require records showing the amount, time, place and business purpose of the vehicle use. A practical contemporaneous log should record:

For 2026, the trip date determines which rate applies. Reconstructing the split months later from a calendar or bank statement is harder and may be less persuasive than a log maintained at or near the time of each trip.

Owned and leased vehicles follow different method rules

Owned vehicle: To preserve the option to use the standard mileage rate, you generally must choose it in the first year the car is available for business use. In later years, you may be able to switch between the standard-mileage and actual-expense methods, subject to the depreciation rules.

Leased vehicle: If you choose the standard mileage rate, you generally must continue using it for the entire lease period, including renewals.

The IRS rates apply equally to gasoline, diesel, hybrid and fully electric automobiles. The rate does not change based on the vehicle’s fuel type.

The standard rate also affects vehicle basis

Part of the business mileage rate is treated as depreciation. For 2026, the depreciation component is 35¢ per business mile. A taxpayer using the standard rate must reduce the vehicle’s tax basis by the depreciation amount deemed allowed, even though depreciation is not separately claimed. Announcement 2026-11 changed the mileage rates beginning July 1 but left the other provisions of Notice 2026-10 in effect.

Most employees cannot deduct unreimbursed mileage

The business rate does not make every work-related trip deductible. Most employees cannot claim a federal deduction for unreimbursed employee vehicle expenses. Limited statutory exceptions may apply, including certain Armed Forces reservists, qualified performing artists, fee-basis state or local officials and eligible educators. Self-employed taxpayers and business owners should still determine whether the travel is genuinely business-related and properly documented.

Official IRS sources

General information only. This article is not legal or individualized tax advice. Eligibility and the best deduction method depend on the taxpayer’s facts, vehicle history and records.

Are vehicle expenses being questioned?

Records get small-kine messy? Bring what you have. If the IRS is examining your mileage or you are rebuilding records for unfiled returns, Kōkua Tax can help sort what matters and explain the next step.

Talk with a local tax professional