If you or your employees drive for work, there is an unusual tax development this summer: the IRS has raised the standard business mileage rate mid-year, something it rarely does, effective July 1, 2026. The business rate went from 72.5 cents to 76 cents per mile, the highest it has ever set. Here is what changed and what to do about it.
What changed
The IRS raised the standard business mileage rate to 76 cents per mile from July 1 through the end of 2026, up from 72.5 cents.
The IRS sets a standard mileage rate each year so business owners can deduct vehicle costs without tracking every expense. For 2026 that rate started at 72.5 cents per mile. Citing rising fuel prices, the IRS then made a rare mid-year adjustment, raising the business rate to 76 cents per mile for the rest of the year. The medical and qualified moving rate also rose, from 20.5 to 23.5 cents per mile. The charitable rate is fixed by law and stays at 14 cents per mile. Mid-year changes are uncommon; the last one was in 2022, also driven by a spike in gas prices. When the set rate drifts too far from the real cost of driving, the IRS steps in to close the gap.
The 2026 wrinkle: two rates in one year
Because the increase landed mid-year, your 2026 return will use two business mileage rates, split at June 30.
This is the part that trips people up. You will apply 72.5 cents per mile to business miles driven January 1 through June 30, and 76 cents per mile to business miles driven July 1 through December 31. So you need to know how many business miles you drove in each half of the year. The most useful thing you can do now is draw a clear line in your mileage log at June 30: total the first half while the records are fresh, and start a clean count for the second. A few minutes now saves a real headache next spring.
Which method does this apply to?
These rates apply to the standard mileage method, one of the two ways to deduct vehicle costs.
The standard mileage method multiplies your business miles by the set rate, folding fuel, depreciation, maintenance, and insurance into one figure. The alternative is the actual expense method, where you track and deduct your real vehicle costs. Which is better depends on your vehicle and how much you drive, and there are rules about switching, particularly in a vehicle''s first business year and for leased vehicles. If you are unsure which deduction method serves you best, that is worth settling before year-end rather than at filing.
What good records look like
Whichever rate applies, your deduction is only as strong as your records.
For every business trip, the IRS expects the date, the miles, the destination, and the business purpose. A reliable mileage app makes this easy; just confirm yours switched to the 76-cent rate on July 1. (For a full system that holds up year-round, see our companion post on tracking mileage and expenses without the year-end scramble.)
If you reimburse employees
If you reimburse employees for driving, update your rate to 76 cents per mile for travel on or after July 1.
Many employers reimburse at the IRS rate because it keeps the reimbursement tax-free to the employee. If that is you, make the change so your team is paid fairly and your records stay clean.
The bottom line
A mid-year rate change is easy to miss and mildly costly if you do.
Note the 76-cent rate, split your mileage log at June 30, and keep your trip records current for the rest of the year. If you would like help choosing a deduction method, setting up a mileage system that holds up, or handling reimbursements, we are glad to help.
Capture every mile you are entitled to
If you want an accounting partner who treats your finances as more than forms to file, we are glad to help. Contact Stone Accounting Services and we will make sure you capture every mile you are entitled to.
This post is provided for general educational purposes and does not constitute specific tax advice. Every business is different. We welcome the opportunity to discuss yours.
