Federal Tax

The IRS released the optional standard mileage rates for 2026. Most taxpayers may use these rates to compute deductible costs of operating vehicles for:

• business,
• medical, and
• charitable purposes

Some members of the military may also use these rates to compute their moving expense deductions.

2026 Standard Mileage Rates

The standard mileage rates for 2026 are:

• 72.5 cents per mile for business uses;
• 20.5 cents per mile for medical uses; and
• 14 cents per mile for charitable uses.

Taxpayers may use these rates, instead of their actual expenses, to calculate their deductions for business, medical or charitable use of their own vehicles.

FAVR Allowance for 2026

For purposes of the fixed and variable rate (FAVR) allowance, the maximum standard automobile cost for vehicles places in service after 2026 is:

• $61,700 for passenger automobiles, and
• $61,700 for trucks and vans.

Employers can use a FAVR allowance to reimburse employees who use their own vehicles for the employer’s business.

2026 Mileage Rate for Moving Expenses

The standard mileage rate for the moving expense deduction is 20.5 cents per mile. To claim this deduction, the taxpayer must be:

• a member of the Armed Forces of the United States,
• on active military duty, and
• moving under an military order and incident to a permanent change of station

The Tax Cuts and Jobs Act of 2017 suspended the moving expense deduction for all other taxpayers until 2026.

Unreimbursed Employee Travel Expenses

For most taxpayers, the Tax Cuts and Jobs Act suspended the miscellaneous itemized deduction for unreimbursed employee travel expenses. However, certain taxpayers may still claim an above-the-line deduction for these expenses. These taxpayers include:

• members of a reserve component of the U.S. Armed Forces,
• state or local government officials paid on a fee basis, and
• performing artists with relatively low incomes.

Notice 2025-5, is superseded.

Notice 2026-10

IR 2025-128

Federal Tax

The IRS issued frequently asked questions (FAQs) addressing updates to the Premium Tax Credit. The FAQs clarified changes to repayment rules, the removal of outdated provisions and how the IRS will treat updated guidance.

Removal of Repayment Limitations

For tax years beginning after December 31, 2025, limitations on the repayment of excess advance payments of the Premium Tax Credit no longer applied.

Previously Applicable Provisions

Premium Tax Credit rules that applied only to tax years 2020 and 2021 were no longer applicable and were removed from the FAQs.

Updated FAQs

The FAQs were updated throughout for minor style clarifications, topic updates and question renumbering.

Reliance on FAQs

The FAQs were issued to provide general information to taxpayers and tax professionals and were not published in the Internal Revenue Bulletin.

Legal Authority

If an FAQ was inconsistent with the law as applied to a taxpayer’s specific circumstances, the law controlled the taxpayer’s tax liability.

Penalty Relief

Taxpayers who reasonably and in good faith relied on the FAQs were not subject to penalties that included a reasonable cause standard for relief, to the extent reliance resulted in an underpayment of tax.

FS-2025-10

IR 2025-127

Federal Tax

The Internal Revenue Service Math and Taxpayer Help Act has advanced to the White House after passage in the Senate.

The bill, H.R. 998, was introduced in the House in February 2025 and requires the IRS to provide specific information when it sends a notice to taxpayers when there is a math or clerical error and send a notice related to an abatement of taxes assessed due to a math or clerical error, as well as provide procedures for requesting such an abatement.

It also requires the agency to implement a pilot program for sending notices on a clerical error.

The notice regarding the error must include the following information:

• A clear description of the error, including the type of error and the line in the tax return where the error occurred;
• An itemized computation of adjustments required to correct the error;
• The telephone number for the automated transcript service; and
• The deadline for requesting an abatement of any tax assessed due to the error.

IRS will be required to provide procedures to taxpayers how to request in writing, electronically, by phone, or in person an abatement of tax assessed due to a math or clerical error. The pilot program on the issuance of the math/clerical error letters will require a report to Congress.

H.R. 998 passed by unanimous consent in the Senate on October 20, 2025. It passed by a voice vote in the House of Representatives on March 31, 2025.

The American Institute of CPAs applauded passage of H.R. 998.

“The IRS Math and Taxpayer Health Act represents common-sense reform that enhances IRS operations and improves the taxpayer experience,” AICPA Vice President of Tax Policy and Advocacy Melanie Lauridsen said in a statement. “This new law directly addresses long-standing issues with how the IRS communicates and resolves mathematical or clerical errors on tax returns. By expanding access to abatement procedures and establishing a pilot program for better communication, this law provides greater fairness and due process, reduces confusion and stress and offers taxpayers improved access to remedies.”

By Gregory Twachtman, Washington News Editor

Federal Tax

For 2026, the Social Security wage cap will be $184,500, and Social Security and Supplemental Security Income (SSI) benefits will increase by 2.8 percent. These changes reflect cost-of-living adjustments to account for inflation.

Wage Cap for Social Security Tax

The Federal Insurance Contributions Act (FICA) tax on wages is 7.65 percent each for the employee and the employer. FICA tax has two components:

• a 6.2 percent social security tax, also known as old age, survivors, and disability insurance (OASDI); and
• a 1.45 percent Medicare tax, also known as hospital insurance (HI).

For self-employed workers, the Self-Employment tax is 15.3 percent, consisting of:

• a 12.4 percent OASDI tax; and
• a 2.9 percent HI tax.

OASDI tax applies only up to a wage base, which includes most wages and self-employment income up to the annual wage cap.

For 2026, the wage base is $184,500. Thus, OASDI tax applies only to the taxpayer’s first $184,500 in wages or net earnings from self-employment. Taxpayers do not pay any OASDI tax on earnings that exceed $184,500.

There is no wage cap for HI tax.

Maximum Social Security Tax for 2026

For workers who earn $184,500 or more in 2026:

• an employee will pay a total of $11,439 in social security tax ($184,500 x 6.2 percent);
• the employer will pay the same amount; and
• a self-employed worker will pay a total of $22,878 in social security tax ($184,500 x 12.4 percent).

Additional Medicare Tax

Higher-income workers may have to pay an Additional Medicare tax of 0.9 percent. This tax applies to wages and self-employment income that exceed:

• $250,000 for married taxpayers who file a joint return;
• $125,000 for married taxpayers who file separate returns; and
• $200,000 for other taxpayers.

The annual wage cap does not affect the Additional Medicare tax.

Benefit Increase for 2026

Finally, a cost-of-living adjustment (COLA) will increase social security and SSI benefits for 2026 by 2.8 percent. The COLA is intended to ensure that inflation does not erode the purchasing power of these benefits.

Social Security Fact Sheet: 2026 Social Security Changes

SSA Press Release: Social Security Announces 2.8 Percent Benefit Increase for 2026

John recently passed the CPA exam. He has begun the process of obtaining licensure with the New State Board of Accountancy. John is also QuickBooks Certified, which has been a value added to his client base. John’s focus has centered on attest and financial services to a variety of contractors, developers, and specialty trade entities. He has developed strong accounting and tax preparation skills at the entity level, which enables him to see the client’s entire scope of needs and concerns. He is a go-to-individual for problem solving complex corporate structures and financial statement presentation.

John is a resident of Atlantic Highlands with his wife Hunter. They enjoy traveling, hiking, snowboarding, sneaking in runs during tax season, and spending time with family and friends.

Ryan finds motivation in his family and friends as he strives for career growth. He values client relationships and is looking forward to carrying that into his role at Woolston Jensen & McNamara.

WJM (a 2025 Master Sponsor) took home the award for Best Associate Logo.

Pictured are the Flair Marketing  Group and WJM representatives:

(L to R) Brianna Shaffrey, Stephanie Shaffrey, Bill McNamara, Kevin Donovan, and Michael Henrich.

To stay informed on how this extension might affect your business and reporting obligations, read the full details here: FinCEN Extends BOI Reporting Deadline and Halts Enforcement.

This is because another judge in a separate case has also issued a nationwide injunction against the BOI reporting requirements. (Smith v. U.S. Department of Treasury (January 7, 2025) U.S. Dist. Court, Eastern Dist. of Texas, Case No. 6:24-CV-336)) To date, the Department of Justice has not filed an appeal in Smith. It is not known whether the new administration will appeal the case.

This means that, for now, businesses are not required to file BOI reports and cannot be penalized for failing to do so.

It is also important to note that two bills (HR 425 and S 100) have been introduced in Congress to repeal the Corporate Transparency Act, which created the BOI reporting mandate.

We will keep you apprised of any further developments as they occur.

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