IRS Advisory Council Issues Annual Report
The IRS Advisory Council (IRSAC) released its annual report addressing taxpayer service issues, workforce challenges, technology needs, and administrative improvements. The report offers insight into internal IRS pressures and future areas of focus.
Why It Matters:
The IRSAC report is a leading indicator of what is coming next. It provides valuable context on enforcement focus, service limitations, and areas where process improvements are likely.
Actionable Steps:
- Anticipate continued service delays and plan timelines accordingly.
- Use the report to inform firm-level process improvements.
- Monitor follow-up actions from the IRS and Treasury.
Business Standard Mileage Rate Increases For 2026
The IRS announced an increase to the standard mileage rate for business use of a vehicle to 72.5 cents per mile for 2026, up from 70 cents in 2025. This annual update affects taxpayers who use the standard mileage method to deduct vehicle expenses, including sole proprietors, independent contractors, and small businesses.
Why It Matters:
Mileage rate changes are a high-impact adjustment for many clients. Even small per-mile increases can meaningfully affect deductions, taxable income, and quarterly estimates. This update also provides a timely reminder to reinforce proper mileage tracking with clients.
Actionable Steps:
- Update tax planning models and deduction calculators for 2026.
- Notify clients who regularly deduct mileage of the new rate.
- Reassess whether standard mileage or actual expense methods remain optimal.
Treasury & IRS Issue Guidance On Additional First-Year Depreciation
The Treasury and the IRS released guidance addressing changes to the additional first-year depreciation deduction as amended by the One Big Beautiful Bill Act. The guidance clarifies eligibility, election mechanics, and transition rules as bonus depreciation returns to 100% for qualifying property.
Why It Matters:
Depreciation remains one of the most powerful tax planning tools for business clients. Clear guidance allows professionals to confidently advise on asset purchases, timing strategies, and amended return opportunities, especially for clients making significant capital investments.
Actionable Steps:
- Review client asset purchases for bonus depreciation eligibility.
- Revisit prior projections affected by phased-down depreciation rules.
- Coordinate with clients on timing future acquisitions.
Proposed Regulations Provide Guidance on Car Loan Interest Deduction
The IRS released proposed regulations interpreting the new car loan interest deduction created under recent legislation. The rules outline eligibility requirements, limitations, and how the deduction interacts with existing provisions.
Why It Matters:
Any new deduction creates risk, opportunity, and confusion. Tax professionals will be relied on to interpret the rules, manage expectations, and ensure compliance, especially while regulations remain proposed and subject to change.
Actionable Steps:
- Monitor finalization of the proposed regulations.
- Prepare client-facing explanations to address questions.
- Avoid aggressive positions until guidance is finalized.
IRS IT Overhaul Set To Finish By 2028
According to a former IRS official, the agency’s multi-year IT modernization initiative is expected to conclude around 2028. The overhaul aims to improve system reliability, taxpayer services, and digital access. Progress will depend heavily on funding and staffing stability.
Why It Matters:
IRS technology directly affects processing times, notice accuracy, and practitioner efficiency. Understanding the modernization timeline helps firms set realistic expectations for clients and plan internal workflows accordingly.
Actionable Steps:
- Continue leveraging IRS online services where available.
- Set client expectations around response times and delays.
- Stay informed on funding and implementations milestones.