Illinois Mileage Deduction 2026: Federal + 4.95% State Savings

Self-employed in Illinois? Your mileage deduction saves you money twice, once on your federal return, once on your state return. Illinois has a flat 4.95% income tax. Your Schedule C deduction flows straight through to reduce it.

What You Save Per Mile

The 2026 IRS standard mileage rate is 72.5¢ per mile. Here is what 15,000 business miles saves in Illinois:

The flat rate makes Illinois simple. No brackets to calculate. Every deductible dollar saves 4.95 cents on state taxes, regardless of your income level.

How Illinois State Taxes Work With Schedule C

Illinois starts with your federal adjusted gross income (AGI) and applies a few state-specific adjustments (most filers have none). Your mileage deduction on Schedule C reduces your AGI at the federal level, and that lower AGI carries directly to your Illinois return.

No separate state mileage form. No Illinois-specific deduction limits. The federal deduction does the work for both returns.

How to File

Federal: Schedule C, Line 9. Business miles × 72.5¢.

Illinois: File your state return. Your federal AGI (already reduced by the mileage deduction) is the starting point. Apply any Illinois-specific additions or subtractions (most self-employed filers have minimal adjustments). The 4.95% flat rate applies to the result.

Nearly 1 Million Self-Employed in Illinois

Illinois has 994,000 self-employed workers, including freelancers, contractors, and gig workers. Over 155,000 work in transportation and warehousing alone, the largest gig sector in the state. Cook County (Chicago) accounts for 491,000 gig workers.

Chicago is a top-10 Uber and DoorDash market, and rideshare and delivery drivers there should know that deadhead miles, driving between passengers with no fare, are deductible. Construction trades benefit from year-round infrastructure projects, with electricians, HVAC techs, and plumbers driving between job sites across Chicagoland and the suburbs. B2B sales reps cover the Chicago metro and downstate territories, and home health workers and nurses drive between patient homes across the state.

Illinois Freelance Worker Protection Act

Illinois passed the Freelance Workers Protection Act in 2023. It covers independent contractors earning $500+ in a 120-day period and requires written contracts and timely payment. This does not affect your mileage deduction, but it does protect your right to get paid for the work that generates those miles.

W-2 Employees: Reimbursement, Not Deduction

W-2 employees in Illinois cannot deduct mileage on federal or state taxes. But unlike most states, Illinois requires your employer to reimburse you under 820 ILCS 115/9.5. See the Illinois mileage reimbursement guide for your rights.

FAQ

Does my mileage deduction reduce Illinois state taxes?

Yes. Illinois uses your federal AGI as the starting point. Your Schedule C mileage deduction reduces AGI, which directly reduces your Illinois tax at the flat 4.95% rate.

What is the Illinois mileage rate for 2026?

Illinois does not have a state-specific mileage rate. The federal IRS rate of 72.5¢/mile applies. This is the rate you use on Schedule C.

Can Chicago rideshare drivers deduct mileage?

Yes. As independent contractors, rideshare and delivery drivers deduct business miles on Schedule C. This reduces federal income tax, self-employment tax, and Illinois state tax. At 20,000 business miles, that is a $14,500 deduction.

Do I need to track mileage separately for Illinois?

No. One mileage log serves both your federal and Illinois returns. The IRS log requirements (date, destination, purpose, miles) are sufficient for both.

Can W-2 employees deduct mileage in Illinois?

No. The mileage deduction for W-2 employees was permanently eliminated under the One Big Beautiful Bill. However, Illinois requires your employer to reimburse you under 820 ILCS 115/9.5.

994,000 self-employed Illinoisans. How many are tracking every mile? Start free →