IRS Raises Business Mileage Rate to 76 Cents for Second Half of 2026

The IRS raised its standard business mileage rate to 76 cents per mile starting July 1, 2026, a 3.5-cent increase from the 72.5 cents that applied during the first half of the year. The agency announced the change via Announcement 2026-11, published in Internal Revenue Bulletin 2026-29.

The mid-year adjustment is relatively rare. The IRS typically sets mileage rates once annually, but rising fuel prices prompted the agency to issue a revision for the second half of 2026.

The medical and moving mileage rate also increased, rising to 23.5 cents per mile from 20.5 cents. The moving deduction applies only to certain active-duty military members and members of the intelligence community. The charitable mileage rate stays fixed at 14 cents per mile, set by statute and not subject to IRS adjustment.

The applicable rate is determined by when the mileage was incurred, not when the expense report is filed. A business trip taken on June 30 is reimbursed at 72.5 cents even if the report is submitted in July.

Employers are not required to use the IRS standard rate. Many organizations use it as a benchmark for tax-free reimbursements under accountable plans, but companies may choose to reimburse actual vehicle expenses or use a different method. The IRS requires detailed documentation for any mileage reimbursement to maintain its tax-exempt status, including the date, starting point, destination, business purpose, and miles driven.

Finance departments that process expense reports spanning both halves of 2026 need to maintain both rates in their systems to calculate reimbursements accurately.

The increase reflects broader inflationary pressure on vehicle operating costs. Gas prices have risen in 2026, contributing to higher costs for workers who use personal vehicles for business travel. The IRS last made a mid-year mileage rate adjustment in 2022, when fuel prices spiked sharply.