IRS Raises Mileage Rate Midyear. Here's Who Benefits in 2026

 IRS Raises Mileage Rate Midyear. Here's Who Benefits in 2026

**The IRS just made a rare midyear adjustment to the standard mileage rate, bumping it up to 76 cents per mile for the second half of 2026. Here's what the change means for your wallet—and who stands to gain the most.**

---

## Introduction: A Rare Midyear Move

If you drive for work, you may not know it yet, but the Internal Revenue Service just gave you a small financial break. On July 13, 2026, the IRS quietly announced a rare midyear increase to the standard mileage rates. Effective retroactively to July 1, the business mileage rate jumped from 72.5 cents per mile to **76 cents per mile**.

It's not every year the IRS makes a change like this. The last midyear adjustment was in 2022, when gas prices spiked following Russia's invasion of Ukraine. Before that, you have to go back to 2011. But with the national average for regular gasoline climbing from about $2.89 per gallon in December 2025 to roughly **$3.87 per gallon** by July 2026—a 34% increase—the IRS decided it was time to act. Much of that surge reflects the disruption and uncertainty in global oil markets caused by the war in Iran.

The new rates apply to mileage **on or after July 1, 2026**, and will be reflected on 2026 federal income tax returns filed next year. But not everyone will benefit equally. Here's what you need to know.

---

## The New Rates: What Changed

The IRS standard mileage rates for the second half of 2026 are as follows:

| Use | Jan 1 – Jun 30, 2026 | Jul 1 – Dec 31, 2026 |

|-----|---------------------|---------------------|

| **Business** | 72.5¢ per mile | **76¢ per mile** |

| **Medical** | 20.5¢ per mile | **23.5¢ per mile** |

| **Moving (military/intel)** | 20.5¢ per mile | **23.5¢ per mile** |

| **Charitable** | 14¢ per mile | **14¢ per mile** (unchanged) |

The business rate is up 3.5 cents from the first half of the year. The medical and moving rates are also up 3.5 cents, from 20.5 to 23.5 cents per mile. The charitable mileage rate, however, remains fixed at 14 cents per mile—a rate that has been unchanged since 1998.

Why the difference between business and medical/moving rates? The business rate is based on both **fixed and variable costs** of operating a vehicle—things like depreciation, insurance, repairs, tires, maintenance, gas, and oil. The medical and moving rates, by contrast, are based on **variable operating costs only**. That's why the business rate is significantly higher, and why all three rates can move in response to higher fuel prices.

---

## Why the IRS Made This Change

The IRS doesn't typically adjust mileage rates in the middle of the year. But when gas prices spike dramatically, the agency has the authority to make an interim adjustment.

When the IRS announced the original 2026 rates in late December 2025, gas prices were near their lowest level in years. The national average for regular gasoline was about **$2.89 per gallon**. By July 13, 2026, AAA put the national average at roughly **$3.87 per gallon**—an increase of about 98 cents, or 34%.

The spike was largely driven by the Iran war, which disrupted global oil markets and raised concerns about production and the movement of oil through the Strait of Hormuz. The IRS last made a midyear adjustment in 2022, when gasoline prices surged following Russia's invasion of Ukraine. Before that, the last midyear move was in 2011.

---

## Who Benefits from the Higher Rate?

The mileage rate increase is good news for anyone who drives for work—but the benefits depend on your specific situation.

### Self-Employed Individuals and Small Business Owners

The biggest winners are **self-employed individuals** and **small business owners** who can claim the mileage deduction on their tax returns. If you're self-employed and drive for business, you can deduct the applicable mileage rate for your business miles. With the new 76-cent rate, every business mile you drive in the second half of 2026 is worth more on your tax return.

For example, someone who drives **20,000 business miles in 2026** would see a significant deduction. Under the original 72.5-cent rate, that would be $14,500. Under the new 76-cent rate for the second half, the total deduction could be even higher. Those filing 2026 returns next year will need to take into account **both rates**: the lower rate for the first half of the year and the higher rate beginning July 1.

### Employees Who Are Reimbursed by Their Employers

Many companies reimburse their employees for mileage driven for business using the IRS rate. If your employer follows the IRS rate, the increase means you'll receive **higher reimbursement checks** for miles driven after July 1.

However, there's an important catch: **if you're reimbursed by your employer, you cannot also claim a deduction on your tax return**. The reimbursement is tax-free if it's part of an accountable plan, but you can't double-dip.

### Employees Who Are Not Reimbursed

For employees who are **not reimbursed** for business driving, the picture is less rosy. The Tax Cuts and Jobs Act of 2017 eliminated the deduction for **unreimbursed employee business expenses** for most taxpayers. If you're a W-2 employee and your employer doesn't reimburse you for mileage, you generally **cannot claim the deduction** on your personal tax return.

There are limited exceptions for certain categories of employees, but for the vast majority of workers, the mileage deduction is no longer available.

### Drivers with Medical Expenses

The rate for medical mileage also increased, from 20.5 to 23.5 cents per mile. If you drive to obtain medical care—and the transportation is primarily for and essential to that care—you may be able to deduct the mileage on your tax return. The new rate applies to miles driven on or after July 1.

### Members of the Military and Intelligence Community

The moving expense rate also increased to 23.5 cents per mile. However, the moving expense deduction is now available only for certain moves by **members of the Armed Forces on active duty** and **members of the intelligence community**. For most taxpayers, the moving expense deduction was suspended under the Tax Cuts and Jobs Act.

---

## What the Rate Increase Doesn't Cover

It's worth noting what the mileage rate increase **doesn't** cover.

**Charitable mileage remains at 14 cents per mile**—a rate that hasn't changed since 1998. Had it kept pace with inflation, it would be about 29 cents per mile today—more than double the statutory rate. According to a 1997 Treasury letter, the charitable rate was set lower than the business rate largely because it excludes costs like depreciation, insurance, and repairs, which are not deductible as charitable contributions.

**Parking fees and tolls** are separate. You can deduct or be reimbursed for parking fees and tolls related to business, medical, or moving travel **in addition to** the mileage rate.

**Electric and hybrid vehicles** are treated the same as gasoline-powered vehicles. The standard mileage rate applies to all vehicles, including fully electric and hybrid automobiles.

---

## What Employers Need to Know

For employers, the midyear rate change creates some administrative challenges.

**Update reimbursement policies.** Employers should update their expense reimbursement policies to reflect the new July 1 rates.

**Review July reimbursements.** Since the IRS didn't announce the new rates until July 13, employers should review any expense reimbursements incurred during the first half of July that were paid under the prior rates to determine if any additional reimbursements are owed.

**State requirements.** Some states, like California, require employers to fully reimburse employees for all expenses actually and necessarily incurred in the course and scope of their employment. The California Division of Labor Standards Enforcement has stated that using the IRS mileage rate will generally satisfy an employer's obligation to reimburse for business-related vehicle expenses.

**Accountable plans.** Employers should ensure that their expense reimbursement policies comply with accountable plan rules to ensure reimbursements continue to be made on a tax-exempt basis.

---

## How to Claim the Mileage Deduction

If you're eligible to claim the mileage deduction, here's what you need to know.

**Keep accurate records.** The IRS requires detailed records of your business mileage. You'll need to track:

- The date of each trip

- The destination and purpose

- The number of miles driven

- The total business miles for the year

**Use the standard mileage rate or actual expenses.** You can choose to use the standard mileage rate or calculate your actual vehicle expenses (gas, oil, repairs, insurance, depreciation, etc.). You can't use both for the same vehicle in the same year.

**File the right forms.** Self-employed individuals typically claim the deduction on Schedule C. Employees who qualify for the deduction use Form 2106.

**Remember the two-rate rule for 2026.** For 2026, you'll need to calculate your deduction using **72.5 cents per mile for January through June** and **76 cents per mile for July through December**.

---

## Frequently Asked Questions

### Q: When did the new mileage rates take effect?

The new rates are effective for travel **on or after July 1, 2026**. The rates originally announced for 2026 continue to apply to expenses paid or incurred from January 1 through June 30.

### Q: Why did the IRS raise the rates midyear?

The IRS raised the rates due to **recent increases in fuel prices**. When the IRS announced the original 2026 rates in December, gas prices were near their lowest level in years. By July, the national average had jumped about 34%.

### Q: How much is the business mileage rate for the second half of 2026?

The business mileage rate is **76 cents per mile** for travel on or after July 1, 2026. It was 72.5 cents per mile for the first half of the year.

### Q: Can I claim the mileage deduction if my employer reimburses me?

No. If you're reimbursed by your employer for business mileage, you **cannot also claim a deduction** on your tax return. The reimbursement is tax-free under an accountable plan, but you can't double-dip.

### Q: Can W-2 employees claim the mileage deduction?

Generally, **no**. The Tax Cuts and Jobs Act of 2017 eliminated the deduction for unreimbursed employee business expenses for most taxpayers. There are limited exceptions, but for the vast majority of employees, the deduction is no longer available.

### Q: How much is the medical mileage rate?

The medical mileage rate is **23.5 cents per mile** for travel on or after July 1, 2026. It was 20.5 cents per mile for the first half of the year.

### Q: Why is the charitable mileage rate still 14 cents?

The charitable mileage rate is **fixed by statute** at 14 cents per mile and has not changed since 1998. Had it kept pace with inflation, it would be about 29 cents per mile today.

### Q: Does the mileage rate apply to electric vehicles?

Yes. The standard mileage rate applies to **all vehicles**, including fully electric and hybrid automobiles, as well as gasoline- and diesel-powered vehicles.

---

## Conclusion: A Small Break for Drivers

The IRS's midyear mileage rate increase is a rare and welcome adjustment for Americans who drive for work. Whether you're self-employed, run a small business, or get reimbursed by your employer, the 3.5-cent bump—from 72.5 to 76 cents per mile—means more money in your pocket for miles driven in the second half of 2026.

But the benefits aren't universal. W-2 employees who aren't reimbursed for mileage are largely out of luck, thanks to the 2017 tax law changes. And the charitable rate, stuck at 14 cents per mile since 1998, continues to lag far behind inflation.

For those who can claim the deduction, the key is **recordkeeping**. Keep detailed logs of your business, medical, or moving miles. When you file your 2026 tax return next year, you'll need to calculate your deduction using two different rates: 72.5 cents for the first half of the year and 76 cents for the second half.

The IRS doesn't make midyear adjustments often. But when gas prices spike as they have in 2026, it's a reminder that the tax code can—and sometimes does—adapt to the realities of the road.

---

## Disclaimer

**IMPORTANT:** This article is for informational and educational purposes only and does not constitute tax, financial, or legal advice. Tax laws and IRS rates are subject to change. You should consult with a qualified tax professional or financial advisor regarding your specific situation before making any decisions based on this information.

---

*Published: July 16, 2026*

-Read more --

**Tags:** IRS mileage rate, standard mileage rate, 2026 mileage rate, business mileage deduction, IRS midyear adjustment, gas prices 2026, mileage reimbursement, self-employed tax deduction, medical mileage deduction, charitable mileage rate, mileage recordkeeping, IRS Notice 2026-10, IRS Announcement 2026-11, vehicle expense deduction