A Mid-Year Mileage Bump: What the IRS’s July Rate Hike Means for Your Business

Gas prices climbed, and the IRS blinked: the 2026 standard mileage rate rose in the middle of the year. Citing rising fuel costs, the agency bumped the rates mid-cycle, a rare move it makes only when costs spike hard enough. The last time was June 2022; before that, 2011. This doesn’t happen often.

The 2026 standard mileage rate, by the numbers

What changed. Under IRS Announcement 2026-11, the optional standard mileage rates went up for miles driven on or after July 1, 2026:

• Business: 76 cents per mile (up from 72.5), a record high
• Medical and moving: 23.5 cents per mile (up from 20.5)
• Charitable: 14 cents per mile (unchanged, and set by statute, so it never moves)

2026 now has two business rates. Miles from January 1 through June 30 stay at 72.5 cents; July 1 through December 31 count at 76. One clean annual mileage log won’t cut it this year, you’ll effectively keep two, a first-half total and a second-half total. Easy to forget come December.

One wrinkle on timing. The IRS didn’t announce the increase until July 13, but it applies to miles driven on or after July 1. The change is not retroactive, so anything paid or incurred before July 1 stays at 72.5 cents. If you already cut reimbursement checks for early July at the old rate, you may owe your drivers the difference.

If you reimburse employees, act now. If you benchmark mileage reimbursements to the IRS rate, bump your rate to 76 cents for second-half miles. Two reasons: reimbursements paid under a proper accountable plan stay tax-free to your employees, and if you’re still paying the old rate, you’re quietly underpaying your team for every business mile they drive. Not a great look in a tight labor market. Update your expense system and give people a heads-up.

If you’re self-employed, it’s real money. Under the One Big Beautiful Bill Act, employees can no longer deduct unreimbursed business mileage, and that door is permanently closed. But sole proprietors, contractors, and anyone running miles through a Schedule C can still deduct business driving against self-employment income. Commuting to your regular office doesn’t count; driving from your office to a client or job site does. At 76 cents a mile, that adds up in the back half of the year.

Keep records, or lose the deduction. The IRS can disallow an otherwise-legitimate mileage deduction purely for lack of documentation. Whether you use the standard rate or actual expenses, log the date, miles, destination, and business purpose of every trip. A mileage-tracking app that runs automatically is the least painful route. Set it up once and forget it.

Not sure whether the standard rate or actual expenses makes more sense, or how to set up an accountable reimbursement plan that keeps everything tax-free? That’s exactly what we’re here for. Reach out. We’re more than numbers, and we’d rather help you get it right now than untangle it later.

Rates per IRS Announcement 2026-11 (IRB 2026-29), modifying Notice 2026-10, effective July 1, 2026. This is general information, not specific tax advice. Let’s talk before you file.