The IRS Just Raised the Mileage Rate to 76 Cents Mid-Year
What the IRS actually changed
The change comes from Announcement 2026-11, which modifies the annual rates the IRS set back in December under Notice 2026-10. It lands in Internal Revenue Bulletin 2026-29, dated July 13, 2026. Three numbers move. The business rate goes from 72.5 cents to 76 cents per mile. The rate for medical travel and for moving (which only active-duty military and certain intelligence-community members can still claim) goes from 20.5 cents to 23.5 cents. The charitable rate stays put at 14 cents, because Congress fixes that one by statute under section 170(i) and the IRS can’t touch it.
The reason is fuel. The IRS said plainly that the bump results from recent increases in the price of fuel, and the new rate applies to every kind of vehicle: electric, hybrid, gas, and diesel. What matters for your records is the effective date. The revised rates apply to miles driven on or after July 1, 2026. Anything you drove from January through June stays at the old 72.5 cents. So 2026 is a split year, and your mileage log has a line in the middle of it.
Why a mid-year change is rare enough to notice
Here’s the part that surprises people: the IRS almost never does this. The last time it moved the rate in the middle of a year was 2022, when gas spiked past five dollars a gallon. Before that you have to go back to 2011 and 2008. The standard mileage rate normally comes out of an annual study of what it costs to own and run a car, and the agency publishes one number in December and sticks with it. A mid-year revision is the IRS saying costs moved too much to wait until next January.
For a deduction that looks small on paper, the real money adds up fast. A contractor or business owner who drives 12,000 business miles in the back half of the year picks up an extra 3.5 cents on each of them, which is $420 in deduction that wasn’t there under the old rate. The catch is the split. If your bookkeeping lumps the whole year at one rate, you either shortchange yourself on the second half or overstate the first, and an examiner pulling a mileage log knows exactly where July 1 falls.
Who this helps
Owners and the self-employed who use the standard mileage method
If you take the standard mileage rate rather than tracking actual gas and repairs, this is a straight raise on every business mile after June 30. Sole proprietors on Schedule C, single-member LLCs, partners with unreimbursed vehicle costs. The move is to keep a clean log with the June 30 break already marked. Our guide on the business vehicle deduction walks through when standard mileage beats the actual-expense method in the first place.
Employers who reimburse drivers
If you pay employees a mileage allowance under an accountable plan, the reimbursement stays tax-free up to the standard rate, so you can raise what you pay for post-July driving to 76 cents without it becoming taxable wages. The rule has a wrinkle worth reading twice: the new rate applies to an allowance only when it’s both paid on or after July 1 and covers miles driven on or after July 1. Pay in July for June driving and the old rate governs. We build that split into payroll compliance so a reimbursement doesn’t accidentally turn into a W-2 line.
Agents and other heavy-driving pros
Real estate agents, home-service operators, anyone whose car is basically a second office. More miles means the rate change moves more dollars. Our real estate agent mileage guide covers how to track, calculate, and defend those miles, and the same discipline applies to anyone deducting a heavy annual total.
The catch worth knowing
The higher rate only reaches you if you use the standard mileage method. If you deduct actual expenses (gas, insurance, repairs, depreciation, lease payments), the announcement changes nothing for you, because your deduction already tracks real cost. Charitable driving stays frozen at 14 cents no matter what fuel does, so the volunteer miles don’t move. And post-2017, an employee who isn’t reimbursed still can’t deduct work mileage at all, except for a short list (armed forces reservists, certain state and local officials, qualified performing artists, and eligible educators). The rate went up, but who gets to use it didn’t change. If you’ve been on the fence between the standard rate and actual expenses, the mid-year bump is one more input, not a reason to switch mid-vehicle. Our rundown on self-employed deductions lays out where each method wins.
What to watch next
Two open questions. First, whether this holds. The IRS tied the increase to fuel prices, and fuel prices move both ways, so the rate could stay at 76 cents into 2027 or reset again in the December annual notice. Plan on the split for 2026 and wait for the year-end number before assuming anything about next year. Second, the reimbursement timing. Employers running fixed monthly car allowances or cents-per-mile plans should confirm their payroll system flips to 76 cents for the right period, not the calendar month it happens to process. Get the effective date wrong and you either underpay drivers or hand them taxable income by mistake. Neither is hard to avoid if you catch it before the next pay run.
How The Reed Corporation works with clients on this
We split the 2026 mileage at June 30 on every return that uses the standard rate, so the deduction is right on both halves instead of averaged into something an examiner can pick apart. For clients who reimburse, we check that the accountable-plan rate and the pay-date timing line up with the announcement, because that’s where a clean reimbursement quietly becomes a wage. And we keep the log standard high, since the deduction is only worth what you can defend. A rate change is small until it’s a few thousand miles across a fleet, and then the details are the whole game.
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Frequently Asked Questions
What is the new IRS mileage rate for 2026?
For business driving, the rate is 76 cents per mile for miles driven on or after July 1, 2026, up from 72.5 cents in the first half of the year. The medical and moving rate rises to 23.5 cents from 20.5 cents on the same date. The charitable rate stays at 14 cents all year, because it’s fixed by statute. The change comes from Announcement 2026-11, published in Internal Revenue Bulletin 2026-29. Because the rates changed mid-year, 2026 has two business rates in it, and any deduction or reimbursement has to respect the July 1 line. The IRS pointed to rising fuel prices as the reason for stepping in before the usual December update.
Why did the IRS change the rate in the middle of the year?
Fuel prices. The IRS said the revision results from recent increases in the price of fuel, and a mid-year change is how the agency responds when operating costs move too much to wait for the annual December notice. It’s rare. The last mid-year adjustment was in 2022, and before that 2011 and 2008. The standard business rate normally comes from a yearly study of the fixed and variable costs of running a vehicle, published once and left alone. When the agency breaks that pattern, it’s a signal that the gap between the old rate and real driving costs got wide enough to matter. The higher rate applies to every vehicle type, including electric and hybrid, not just gas and diesel.
How do I handle mileage that spans July 1, 2026?
Split it. Add up your business miles from January 1 through June 30 and apply 72.5 cents to that total. Add up your miles from July 1 through December 31 and apply 76 cents to that total. Then combine the two for your deduction. The single most useful thing you can do right now is pull your odometer or app total as of June 30, while the record is fresh, rather than trying to reconstruct the split next April. If you reimburse employees, the same break applies, and the reimbursement rate should follow the date the miles were driven, not the date you happen to cut the check. Keeping the log clean through the change is what makes the higher second-half rate worth claiming.
Does the higher rate help me if I deduct actual car expenses?
No. The standard mileage rate and the actual-expense method are two different ways to deduct vehicle costs, and the mid-year increase only touches the standard rate. If you deduct actual expenses, meaning gas, insurance, repairs, registration, lease payments, and depreciation multiplied by your business-use percentage, your deduction already reflects what you really spent, so a rate change is irrelevant to you. Which method wins depends on the vehicle and how you drive it. A fuel-hungry truck with heavy repair bills often favors actual expenses, while a reliable commuter car with high business mileage usually favors the standard rate. The July bump is one more data point, not a reason to switch methods on a vehicle mid-stream, which carries its own restrictions.
Can employees deduct mileage their employer didn’t reimburse?
For most people, no, and that hasn’t changed. Since the 2017 tax law, an ordinary W-2 employee can’t deduct unreimbursed job-related mileage, even at the new 76-cent rate. The deduction survives only for a narrow set of filers: armed forces reservists traveling more than 100 miles for duty, certain fee-basis state and local government officials, qualified performing artists, and eligible educators within their limit. Everyone else who drives for work should be looking at reimbursement instead. An employer can pay a mileage allowance under an accountable plan tax-free up to the standard rate, which is usually the better answer than hoping for a deduction that the law no longer allows for most employees. The rate going up makes reimbursement slightly more valuable, not the lost deduction.
Will the 76-cent rate carry into 2027?
Unknown, and it’s better not to assume. The IRS tied the increase to fuel prices, which move in both directions, so the rate could hold at 76 cents or reset in the annual notice the agency usually issues in December for the following year. The safe approach is to plan around the split for 2026 and wait for the year-end number before building 2027 estimates or reimbursement policies around any figure. If fuel eases, the 2027 rate could land lower than 76 cents even though the mid-year move pushed 2026 higher. We watch the December notice each year and update client reimbursement rates and estimate assumptions when it lands, rather than carrying a mid-year figure forward on faith.