IRS Raises Business Mileage Rate to 76 Cents Per Mile for Second Half of 2026
The IRS announced a midyear increase in the standard mileage rate for business driving, raising it from 72.5 cents to 76 cents per mile effective July 1, 2026. The increase was driven by rising fuel costs tied to geopolitical tensions affecting global oil markets.
The IRS raised the standard mileage rate for business driving to 76 cents per mile for the second half of 2026, up from 72.5 cents per mile, the agency announced on July 13, 2026.
The increase applies to transportation expenses paid or incurred from July 1 through December 31, 2026. The rate for medical and qualified moving expenses also rose, from 20.5 cents to 23.5 cents per mile. The charitable mileage rate remains fixed by statute at 14 cents per mile and was not adjusted.
The IRS cited rising fuel costs as the reason for the midyear change. Geopolitical tensions, particularly related to the conflict in Iran, have pushed global oil prices higher throughout 2026.
Midyear mileage rate adjustments are rare. The IRS has made similar off-cycle changes only twice before, in 2011 and 2022, both times in response to significant fuel price increases.
Taxpayers filing 2026 federal income tax returns will need to account for two sets of rates: the original rates that applied from January 1 through June 30, and the updated rates for the rest of the year.
Employers who reimburse workers for business driving should review their reimbursement policies to ensure they comply with the new rates. Businesses in states with specific expense reimbursement requirements should also check whether state rules require any additional adjustments.
The standard mileage rate is an optional method for calculating deductible vehicle expenses. Taxpayers can also use the actual expense method, which requires tracking all vehicle costs including gas, insurance, repairs, and depreciation.
