As we head into 2026, we want to share key changes that could impact your bottom line. Whether you're using an auto for business, medical or charitable purposes, teaching in the classroom, or serving our country, these updates deserve your attention. Let's break down what's changing and how it might affect you--because our goal is always to make your tax life #LessTaxing.
Business Mileage Rate Gets a Boost
Good news for business travelers! The IRS has increased the standard business mileage rate to 72.5 cents per mile for 2026, up 2.5 cents from 2025. This seemingly small increase can add up quickly if you're frequently on the road for work.
Here's what changed for 2026:
- Business use: 72.5 cents per mile (up from 70 cents)
- Medical purposes: 20.5 cents per mile (down 0.5 cents)
- Moving (military/intelligence community): 20.5 cents per mile (down 0.5 cents)
- Charitable use: 14 cents per mile (unchanged)
These rates apply to all vehicle types. While business owners can choose between using the standard mileage rate or calculating actual vehicle expenses, our team will evaluate your specific situation to determine which method delivers the greatest tax savings for your circumstances.
Big Changes for Educators: Unlimited Deductions with New Rules
Teachers and other K-12 educators: this one's for you. The One Big Beautiful Bill Act (OBBBA) has dramatically changed the educator expense deduction, creating both opportunities and new considerations.
What's changing in 2026:
- The $300 annual cap is eliminated—all qualifying unreimbursed expenses become deductible
- The deduction moves from an above-the-line benefit to an itemized deduction
- This means the tax benefit is available only if you itemize deductions
For example, starting in 2026, if you spend $1,000 on classroom supplies and materials, that full amount could be deductible—if you itemize your deductions. The most common itemized deductions are real estate taxes, mortgage interest and donations. The sum of these deductions must exceed $16,100 for a single person and $32,200 for a married couple in order to itemize.
For 2025 tax returns: Educators can still claim up to $300 in unreimbursed classroom expenses as an above-the-line deduction, regardless of their other tax circumstances.
Here's where we come in: This change requires careful analysis to determine the optimal strategy. Please carefully provide us with all of your itemized deductions so that we can evaluate your ability to itemize and ensure that you receive the maximum tax savings possible.
Military and Veteran Benefits: Protecting Those Who Serve
Military service members and veterans continue to receive tax advantages. Here are the new and existing benefits that continue into 2026 and beyond.
Continued Tax Advantages:
- Combat zone exclusions: Active-duty pay, hazard pay, and re-enlistment bonuses earned in combat zones remain tax-free
- Moving expense deduction: Still available for active-duty military and now certain intelligence community members
- Home sale exclusion: Military families get up to 15 years to meet the ownership and use requirements (versus the standard 5 years for civilians)
- Reservist travel deduction: Continue to deduct unreimbursed travel expenses for reserve duties more than 100 miles from home
- Tax-free veteran benefits: Disability compensation and certain pensions remain excluded from taxable income
These benefits recognize the unique financial challenges that come with military service, and our team ensures military families claim every advantage they've earned through that service.
We Handle the Complexity So You Don't Have To
Tax law changes can feel overwhelming, but that's exactly why we're here. At Nichols & Company CPAs, we stay on top of these updates, analyze how they affect each client's unique situation, and implement strategies that minimize your tax liability while maximizing your savings.
You shouldn't have to become a tax expert to get the best results. Whether it's determining the optimal mileage deduction method, evaluating itemized versus standard deductions for educators, or ensuring military families claim every benefit available, we handle the complex analysis and decision-making.
If you have any questions about how these new changes will impact your tax situation starting in 2026, feel free to reach out to your accountant or our office at 614-891-5423.