IRS Transportation Standards: Car Payments, Operating Costs and Transit

Transportation is the Local Standard people misread most often. They see one number, compare it to their car payment, and stop. The IRS standard actually has two parts for vehicle owners, plus a separate allowance for public transit. Understand the pieces, and you will claim what you are entitled to.

The two parts

IRM 5.15.1.8 describes the transportation standards as "nationwide figures for loan or lease payments referred to as ownership costs, and additional amounts for operating costs broken down by Census Region and Metropolitan Statistical Area."

• Ownership costs cover the monthly loan or lease payment. One national number per vehicle.
• Operating costs cover maintenance, repairs, insurance, fuel, registrations, licenses, inspections, parking and tolls. The number depends on where you live.

On Form 433-A (Rev. 6-2026), ownership is line 38 and operating is line 39. Public transportation is line 40.

The 2026 figures

From the Collection Financial Standards effective June 29, 2026:

Operating costs are published for each Census Region and for a list of metropolitan areas. Use the figure that matches where you live, and check the current table on irs.gov for your location before you rely on any number.

How the pieces combine

IRM 5.15.1.10.2 sets the rules:

• Ownership: allow "the full ownership standard amount, or the amount actually claimed and verified by the taxpayer, whichever is less."
• Operating: allow "the full operating standard amount, or the amount actually claimed by the taxpayer, whichever is less." Substantiation for operating costs "is not required unless the amount claimed exceeds the standard."
• No car payment: "If a taxpayer has a car, but no car payment, only the operating costs portion of the transportation standard is used."
• How many vehicles: "A single taxpayer is normally allowed ownership and operating costs for one vehicle." A married couple with two vehicles is allowed each up to the maximum.

When one car payment is above the standard and one is below, IRM 5.15.1.10.2 says the amounts are calculated separately. The high payment is capped at the standard, and the low payment is allowed as claimed.

Example: a Tampa commuter

A single taxpayer in Tampa has a $520 car payment and spends about $360 a month on gas, insurance and maintenance. Under the June 29, 2026 standards:

• Ownership: the lesser of $520 actual and $703 standard. Allowed: $520.
• Operating: the lesser of $360 actual and the $320 Tampa standard. Allowed: $320, unless she substantiates the extra $40 as necessary.

Total transportation allowed: $840. If she had paid off the car, the ownership line would drop to zero, and only the $320 operating allowance would remain. That is the trade-off of a paid-off car in a hardship case: a lower allowance and an asset with equity.

Public transportation

IRM 5.15.1.10.2 calls the public transportation allowance "a floor for individuals with no vehicle." Taxpayers with no vehicle "are allowed the standard, per household, without questioning the amount actually spent." No documentation unless you claim more.

If you own a car and also use transit, both may be allowed if needed for health and welfare or production of income. In that case the IRM allows actual expenses, with documentation needed only if the claim exceeds the standards.

Getting more than the standard

Long commutes are the classic case. IRM 5.15.1.10.2: "If a taxpayer claims higher amounts of operating costs because they commute long distances to reach their place of employment, they may be allowed greater than the standard." The additional cost "would generally meet the production of income test" if substantiated.

A rural worker who drives an hour each way to the only job available has a strong argument. Bring mileage logs, fuel receipts and a map. A nurse with rotating hospital assignments, or a tradesperson who drives between job sites, belongs in the same category.

Excessive vehicles get the opposite treatment. IRM 5.15.1.10.2 says expenses that appear excessive "should be questioned and, in appropriate situations, disallowed." The income-producing asset section, IRM 5.15.1.23, uses an outside salesman driving a luxury car as an example: the IRS includes the equity in the analysis and considers allowing only the loan payment that a moderate replacement vehicle would require.

Business vehicles

If you are self-employed and a vehicle is used for the business, do not claim it twice. IRM 5.15.1.4 says a lease payment claimed as a business expense "will not be allowed as part of the transportation expense on Form 433-A," and a vehicle used for both business and personal purposes should not have its expense duplicated.

Where the standard comes from

IRM 5.15.1.8 says vehicle operating standards come from BLS consumer expenditure data, adjusted for inflation using the Personal Consumption Expenditures price index, with a separate fuel adjustment based on Energy Information Administration data. It adds that operating standards "are not based on average commuting distances." That is exactly why long-distance commuters can justify more.

Example: a two-car household

A married couple in the South Census Region, outside any listed metro area, each drive to work. One car payment is $750 and the other is $460. Combined operating costs run about $650 a month. Under the June 29, 2026 standards:

• First car ownership: the lesser of $750 and $703. Allowed: $703.
• Second car ownership: the lesser of $460 and $703. Allowed: $460.
• Operating for two cars: the lesser of $650 and the $582 South Region standard. Allowed: $582, unless the extra is substantiated as necessary.

Total allowed: $1,745. The $47 by which the first payment exceeds the ownership standard, and the $68 of operating costs above the standard, are treated as available income unless the couple justifies them. Small gaps like these add up, and they are worth arguing when a hardship finding hangs in the balance.

Vehicle equity

A car is also an asset. IRM 5.15.1.30 says motor vehicles are assets, that "equity in these types of vehicles must be determined," and that they "should be considered as possible collateral for loans." Values are usually set from publicly available online valuation resources, and if you disagree with the value, you can get an appraisal from a knowledgeable and impartial dealer.

A modest car with little equity rarely matters. A paid-off truck worth five figures does. The IRS may ask whether you can borrow against it before it agrees you cannot pay. If the vehicle is necessary to get to work and a loan would leave you unable to cover basic expenses, say so and show the numbers. The income-producing asset rules in IRM 5.15.1.23 recognize that taking away the tool that produces the income can backfire.

Leases and buyouts

A lease payment is an ownership cost, measured against the same $703 standard. A lease nearing its end raises a timing question: if the payment will disappear in a few months, or turn into a buyout, tell the IRS. Form 433-A asks for the date of final payment for each vehicle on lines 19a through 19c. A payment ending soon means your allowable expenses will drop, which affects whether hardship lasts.

Bottom line

Claim both parts if you have a car payment. Claim operating costs even if you do not. Use the right regional or metro figure. And if your commute is not average, document it. Transportation is one of the few places where a well-supported deviation is routinely allowed.