IRS Raises the Standard Mileage Rate to 76 Cents: What the Mid-Year 2026 Change Means for Your Vehicle Deduction

The IRS just gave every business driver a raise. Effective July 1, 2026, the standard mileage rate for business use is 76 cents per mile. That’s up 3.5 cents from the 72.5-cent rate for the first half of the year.

Mid-year rate changes are rare. This is the first one since June 2022. It also means every 2026 return with vehicle miles now needs a split-year calculation.

Every figure below is sourced to the IRS, current as of July 24, 2026.

Key takeaways:

• Business miles driven July 1 through December 31, 2026 are worth 76 cents per mile. Miles from the first half of the year stay at 72.5 cents.
• The medical and qualified moving rate rose from 20.5 to 23.5 cents. The charitable rate stays at 14 cents — it is set by statute.
• The date of each trip controls the rate. Your mileage log now has two halves.
• Employers who reimburse at the IRS rate should update their accountable plan rate for miles driven on or after July 1.
• The IRS cited rising fuel prices as the reason for the change.

The new mileage rates for July 1 through December 31, 2026

The increase comes from IRS Announcement 2026-11, published in Internal Revenue Bulletin 2026-29 on July 13, 2026. It revises the rates originally set in Notice 2026-10, which the IRS announced in December 2025. All other provisions of Notice 2026-10 stay in effect, including the rule that a portion of the business rate is treated as depreciation that reduces your car’s basis.

The moving-expense rate applies only to certain active-duty members of the Armed Forces and certain members of the intelligence community. For everyone else, the federal moving deduction remains unavailable.

Why the IRS raised the rate mid-year

The announcement is blunt about the cause: “This modification results from recent increases in the price of fuel” (Announcement 2026-11). Gas prices climbed sharply through the first half of the year, and the fixed per-mile rate stopped reflecting what driving actually costs.

The last time this happened was June 2022, when the IRS added 4 cents to the business rate for the second half of that year. Normally the rate is set once each December and holds for the full calendar year.

What the increase is worth

The math is simple, and it favors people who drive a lot for work.

Say you drive 12,000 business miles in 2026, split evenly across the year:

• 6,000 miles × 72.5¢ (January–June) = $4,350
• 6,000 miles × 76¢ (July–December) = $4,560
• Total 2026 deduction: $8,910

The second-half increase adds $210 versus the old rate on those same miles. High-mileage drivers — contractors moving between job sites, real estate agents running showings, locum tenens physicians covering multiple facilities — gain the most.

Example for illustration only. Your deduction depends on your actual miles, records, and facts — results vary.

Your 2026 mileage log now has two halves

The rate that applies is the rate in effect on the date of each trip. That makes the log itself the whole ballgame this year.

What the IRS expects in a mileage log, per Publication 463:

• The date of each business trip
• The destination and business purpose
• The miles driven for that trip
• Records kept at or near the time of the trip — not rebuilt in April

If you use a mileage-tracking app, check that it applied the new rate starting July 1. Most major apps push the update automatically, but the log is your responsibility, not the app’s. Without contemporaneous records, vehicle deductions are one of the first things the IRS denies on audit — see Topic 510.

Standard mileage vs. actual expenses

The standard rate is one of two ways to deduct business vehicle costs. The other is the actual expense method: gas, insurance, repairs, and depreciation, multiplied by your business-use percentage.

Two rules worth knowing before you choose, per the IRS standard mileage rules:

• To use the standard rate for a car you own, you must choose it in the first year the car is available for business use. After that, you can generally switch between methods year to year.
• Higher fuel prices cut both ways. They raised the standard rate, but they also raise your actual expenses. Heavy trucks and expensive vehicles often still do better under the actual method.

Our NJ small business tax deductions guide covers the vehicle deduction alongside Section 179, home office, and the other major write-offs.

Employers and S-Corp owners: update your reimbursement rate

The standard mileage rate is also the ceiling for tax-free mileage reimbursements under an accountable plan. Does your business reimburse employees at the IRS rate — or does your S-Corp reimburse you? Update the rate to 76 cents for miles driven on or after July 1, 2026.

Three things to check:

• Your payroll or expense system reflects the new rate for July-and-later mileage claims.
• Reimbursements are backed by the same dated log the deduction rules require. Without substantiation, reimbursements become taxable wages — see how contractors use accountable plans.
• W-2 employees generally cannot deduct unreimbursed miles on their federal return, per the IRS rules on who can deduct car expenses. Reimbursement through the employer is the only door for them, which makes getting the plan right worth it.

If you are self-employed, the higher rate also nudges your self-employment tax and quarterly estimate math — a larger deduction lowers net earnings from self-employment. Mid-year is a natural point to re-run projections as part of year-round tax planning.

Five things to do before year-end

The rate change is automatic. Capturing it is not. A short mid-year checklist:

• Check your mileage app. Confirm it applies 76 cents to trips dated July 1 or later. Most apps update automatically, but spot-check one July trip.
• Draw a line at June 30 in a paper log. Total the first half and second half separately. Your tax preparer needs both numbers.
• Update your reimbursement rate. Accountable-plan payments at the old rate leave money on the table. Payments above the IRS rate become taxable wages.
• Re-run your quarterly estimates. A larger vehicle deduction lowers net self-employment income. That can reduce your September 15 estimated payment.
• Rebuild any missing log entries now. Use calendars, job tickets, and GPS history while the trips are fresh — not next April.

Frequently asked questions

What is the IRS standard mileage rate for July through December 2026?

For business miles driven July 1 through December 31, 2026, the standard mileage rate is 76 cents per mile. That is up from 72.5 cents in the first half of the year. The medical and qualified moving rate is 23.5 cents per mile, and the charitable rate stays at 14 cents. The change was made in IRS Announcement 2026-11, published in Internal Revenue Bulletin 2026-29 on July 13, 2026.

Why did the IRS raise the mileage rate in the middle of 2026?

The IRS pointed to recent increases in the price of fuel. Mid-year changes are rare — the last one was in June 2022. That change raised the business rate 4 cents for the second half of that year. Normally the IRS sets one rate each December for the following calendar year.

Do I need two mileage calculations for my 2026 tax return?

Yes. Miles driven January 1 through June 30, 2026 are computed at 72.5 cents per mile. Miles driven July 1 through December 31, 2026 are computed at 76 cents. The date of each trip controls which rate applies. A dated, contemporaneous mileage log showing each trip’s date, destination, business purpose, and miles supports both halves of the calculation.

Can W-2 employees deduct mileage in 2026?

Generally no. Federal law does not currently allow most W-2 employees to deduct unreimbursed job-related mileage, and commuting between home and a regular workplace was never deductible. The practical route is employer reimbursement through an accountable plan, which can pay up to the IRS standard rate tax-free for substantiated business miles. Self-employed people and independent contractors deduct business miles on Schedule C.

Should I use the standard mileage rate or actual expenses?

It depends on the vehicle and how you use it. The standard rate is simpler and often works well for fuel-efficient cars with high business miles. The actual expense method can produce a larger deduction for heavier, costlier vehicles. To use the standard rate on a car you own, the IRS requires choosing it in the first year the car is available for business use. In later years you can generally switch methods. Model both before deciding — results vary by situation.