Selling your car? Here's the depreciation catch

The number, straight from the IRS notice

Notice 2026-10, Section 4 ("Basis Reduction Amount"): "For automobiles a taxpayer uses for business purposes, the portion of the business standard mileage rate treated as depreciation is 26 cents per mile for 2022, 28 cents per mile for 2023, 30 cents per mile for 2024, 33 cents per mile for 2025, and 35 cents per mile for 2026."

Notice 2026-10 states the 2026 figure as one annual number. Unlike the business rate itself, which split mid-year to 72.5¢ then 76¢, we found no published split of the 35¢ depreciation component for the second half of 2026 — the notice gives it as a single annual figure, and that's what this page reports.

How it actually lowers your basis — the IRS's own example

Publication 463 works through this with real numbers. A car bought for $30,500 and driven on standard mileage from 2020 through 2025 — 14,100 miles in 2020 up through 14,900 miles in 2025 — accumulates depreciation by multiplying each year's miles by that year's per-mile depreciation rate (0.27 in 2020 down to the years shown above), for a running total. In the IRS's example the six years of depreciation total $26,224, leaving an adjusted basis of $30,500 − $26,224 = $4,276 — on a car that still runs and is still worth meaningfully more than that on paper.

See what a mile actually costs you to drive for how this depreciation component compares to your car's real, all-in cost per mile — they're not the same number, and conflating them undersells how much of your standard mileage deduction is doing double duty as a basis reduction you'll meet again at sale time.

Why this shows up when you sell

Publication 463 is direct about the consequence: "If you dispose of your car, you may have a taxable gain or a deductible loss. The portion of any gain that is due to depreciation... that you claimed on the car will be treated as ordinary income." A private-party or dealer sale is a disposition; the gain or loss is the amount you receive minus your adjusted basis at that point — the basis already reduced by every year's depreciation component, not your original purchase price.

A trade-in is treated differently: Publication 463 calls it a like-kind exchange where "generally, no gain or loss is recognized," and your basis in the new car carries forward from the old car's adjusted basis plus whatever additional amount you pay. A cash sale doesn't get that treatment — the gain or loss is recognized in the year of sale.

What Publication 463 leaves for a tax professional

The mechanics above assume 100% business use. If your car was used partly for gig work and partly personally, Publication 463's basis rules require allocating cost and depreciation to the business-use percentage, and depreciation limits and prior-year Section 179 or bonus-depreciation elections can complicate the number further. Publication 463 gives the framework but not a single formula that fits every partial-use situation — that calculation is worth a tax professional's review before you report a sale. See standard mileage vs. actual expenses for the underlying election rules this all sits on top of.