The IRS raised the standard business mileage deduction to 76 cents per mile, effective July 1, 2026, marking a rare mid-year adjustment driven by surging fuel costs. The increase of 3.5 cents per mile applies to business travel expenses for the remainder of the year, while the rate for medical and moving purposes climbed to 23.5 cents per mile.
The agency announced the revision on July 13 through Announcement 2026-11, which modified the earlier Notice 2026-10 issued in December 2025. The original 2026 rate of 72.5 cents per mile, set in January, had become insufficient to cover rising vehicle operating costs.
Gasoline prices surged dramatically over the first half of 2026. The American Automobile Association reported that regular gasoline averaged $2.819 per gallon on January 8, then climbed to $3.890 per gallon by July 15—a 38 percent increase in just over six months. This spike prompted the IRS to adjust the deduction mid-year to help taxpayers offset higher fuel and vehicle maintenance expenses.
The mileage rate is used by self-employed individuals, business owners, and employees to claim tax deductions for vehicle expenses. Rather than tracking actual costs, taxpayers can use the standard rate multiplied by business miles driven to calculate their deduction, simplifying tax preparation and substantiation.
A Rare Adjustment With Historical Precedent
Mid-year mileage rate adjustments are uncommon. The 2026 increase marks the first such mid-year change since 2022, when the IRS raised the rate from 58.5 cents to 62.5 cents per mile effective July 1, also in response to fuel price spikes. The IRS has made mid-year adjustments only a handful of times in recent decades, with notable examples occurring in 2005, 2008, and 2011.
The split-year structure requires careful record-keeping: taxpayers must apply the original 72.5-cent rate for business miles driven before July 1, 2026, and the new 76-cent rate for miles driven on or after July 1. Employers reimbursing employees for mileage must likewise distinguish between pre- and post-July 1 travel.
The charitable mileage deduction remains fixed at 14 cents per mile under Internal Revenue Code Section 170(i) and is not subject to annual adjustment. The IRS publishes mileage rates annually in December, but exceptional circumstances—particularly volatile fuel prices—can trigger mid-year revisions to ensure the rates reasonably reflect actual vehicle operating costs.
Sources
- IRS Internal Revenue Bulletin 2026-29 — Published Announcement 2026-11 on July 13, 2026, revising standard mileage rates effective July 1, 2026.
- Journal of Accountancy — Reported on July 15, 2026, that the IRS increase followed a 38 percent rise in gasoline prices from January 8 to July 15, citing American Automobile Association data.
- IRS Official Guidance — Confirmed the 76-cent business rate and 23.5-cent medical/moving rate, and noted that the last mid-year adjustment occurred in 2022.
