The IRS has updated the federal mileage rates for the second half of 2026, and several new tax law changes are now in effect. Learn about the updated mileage rates, farmland tax deferral election, changes to charitable contribution deductions, enhancements to the Child and Dependent Care Credit, and the expanded Educator Expense Deduction.
The IRS has updated the standard mileage rates for the second half of 2026. In addition, several federal tax law changes that took effect in 2026 will affect many taxpayers.
Federal Mileage Rates
July 1 – December 31, 2026
- Business: 76 cents per mile
- Medical: 23.5 cents per mile
- Charitable: 14 cents per mile
January 1 – June 30, 2026
- Business: 72.5 cents per mile
- Medical: 20.5 cents per mile
- Charitable: 14 cents per mile
For additional information, see the Standard Mileage Rate page on the IRS website.
Tax Deferral on the Sale of Farmland to a Qualified Farmer
The One Big Beautiful Bill created a new provision allowing qualified sellers of farmland to elect to pay the federal income tax on the gain from the sale in four equal annual installments when the property is sold to a qualified farmer.
To qualify:
- The farmland must be located in the United States.
- The property must have been used substantially for farming by the seller for at least 10 years before the sale.
- The buyer must be an individual who is actively engaged in farming.
To elect the tax deferral, the qualified seller must complete Form 1062, Deferral of Tax on Gain from the Sale or Exchange of Qualified Farmland Property to Qualified Farmers, and attach it to the federal income tax return for the year of sale.
If the election is made, the tax due on the gain is paid in four equal annual installments – one installment in the year of sale and one installment in each of the following three years.
For additional information, see the Form 1062 Instructions on the IRS website.
Other Federal Tax Law Changes Effective in 2026
Charitable Contribution Deduction Changes
Several changes to the charitable contribution deduction became effective beginning with tax year 2026.
Taxpayers Who Do Not Itemize
Taxpayers who claim the standard deduction may now deduct up to:
- $1,000 of cash charitable contributions ($2,000 for Married Filing Jointly).
Taxpayers Who Itemize
The following changes apply to taxpayers who itemize deductions:
- Charitable contributions are deductible only to the extent they exceed 0.5% of the taxpayer’s Adjusted Gross Income (AGI). As a result, total charitable contributions are reduced by 0.5% of AGI.
- For taxpayers in the 37% tax bracket, the charitable contribution deduction is limited to the 35% tax rate.
- These changes are reflected on Schedule A, which now includes a new Charitable Contributions Limitation Worksheet in the Schedule A instructions.
Child and Dependent Care Credit (Form 2441)
Beginning in 2026:
- The maximum credit percentage for eligible expenses has increased to 50%.
- The minimum credit percentage has increased to 35%.
- The credit percentage decreases by 1% for every $2,000 increase in income, from a maximum of 50% down to a minimum of 35%.
Educator Expense Deduction
Beginning in 2026, the educator expense deduction consists of two parts:
- Eligible educators may deduct up to $350 ($700 for Married Filing Jointly) of qualified educator expenses as an adjustment to income on Form 1040, Schedule 1.
- Eligible educators who itemize deductions may also deduct qualified educator expenses above $350 ($700 for Married Filing Jointly) as an itemized deduction on Schedule A, Line 17k.
You must calculate your vehicle expense deduction by splitting your mileage into two separate periods:
Jan 1 – Jun 30, 2026: Multiply miles driven by 72.5¢.
Jul 1 – Dec 31, 2026: Multiply miles driven by 76.0¢. Keep precise driving logs that distinguish the dates of your business trips to ensure you apply the correct rate to each half of the year.
Under the One Big Beautiful Bill Act, sellers who transfer qualified U.S. farmland to active farmers can defer gain-related income taxes by paying them in 4 equal annual installments instead of all at once.
To make this election, complete Form 1062 (Deferral of Tax on Gain from the Sale or Exchange of Qualified Farmland Property) and attach it to your tax return for the year of the sale. The first installment is due with that year’s return, and the remaining three are due over the following three tax years.
Standard Deduction (Non-Itemizers): You can take an “above-the-line” cash contribution deduction of up to $1,000 for single filers or $2,000 for Married Filing Jointly. Itemized Deductions (Schedule A): Your total deductible charitable gifts are subject to a 0.5% AGI floor (meaning only contributions exceeding 0.5% of your Adjusted Gross Income are deductible). Additionally, if you are in the top 37% tax bracket, the value of your charitable deduction is capped at 35%.
The credit percentage range has increased to 35% (minimum) through 50% (maximum).
Taxpayers with lower AGIs qualify for the maximum 50% credit on eligible expenses.
The credit phases down by 1% for every $2,000 of income above the threshold until it hits the floor rate of 35%.
Yes. Eligible K–12 educators can layer both deduction paths if they have sufficient expenses:
Above-the-Line (Schedule 1): Claim up to $350 ($700 for Married Filing Jointly if both spouses qualify) directly against income without itemizing. Itemized (Schedule A): If you itemize and have qualifying unreimbursed classroom expenses exceeding the $350/$700 cap, you can deduct the remaining portion on Schedule A, Line 17k.
Suresh holds a Master of Commerce (M.Com) degree and is a dedicated personal finance researcher and writer. Combining his advanced academic background in commerce with deep industry research, he covers complex topics like taxation, banking systems, credit analysis, and personal finance strategies. As the founder of Tax Assistant (taxassistant.org), Suresh is committed to translating complicated financial guidelines and economic data into simple, accurate, and actionable educational resources for everyday readers.
