IRS Raises Standard Mileage Rates for Latter Half of 2026 Amid Fuel Price Surge

The Internal Revenue Service is raising its standard mileage rates midyear, citing a sharp climb in fuel costs.

Effective July 1, 2026, the optional standard mileage rates for cars, vans, pickups, and panel trucks will be:

• 76 cents per mile for business use, up from 72.5 cents.
• 23.5 cents per mile for medical purposes, up from 20.5 cents.
• 23.5 cents per mile for moving purposes by eligible active-duty Armed Forces members and certain intelligence community personnel, up from 20.5 cents.
• 14 cents per mile for charitable miles (unchanged).

The revised rates apply to eligible transportation expenses paid or incurred on or after July 1, 2026. The rates originally announced for 2026 remain in effect for expenses from January 1 through June 30, 2026.

Consequently, two distinct sets of standard mileage rates now exist for the 2026 tax year.

Why Did the IRS Change the Rates Midyear?

The IRS typically establishes optional standard mileage rates shortly before the tax year begins. This midyear adjustment was driven by recent fuel price spikes.

When the original 2026 rates were announced in late December, gasoline prices hovered near multi-year lows. The national average for regular unleaded was approximately $2.89 per gallon in December 2025.

By July 13, 2026, AAA reported a national average of roughly $3.87 per gallon—an increase of about 98 cents, or 34 percent. Much of this surge reflects disruption and uncertainty in global oil markets stemming from the war in Iran, including concerns over production and transit through the Strait of Hormuz.

In response, the IRS increased the mileage rates.

The last midyear mileage-rate adjustment occurred in 2022, after gasoline prices surged following Russia’s invasion of Ukraine. The national average reached nearly $5 per gallon that June amid higher crude prices, sanctions, and global supply concerns.

Why Do Business, Medical, Moving, and Charitable Mileage Rates Differ?

The standard mileage rate for business use derives from an annual study of both fixed and variable automobile operating costs, including depreciation, insurance, repairs, tires, maintenance, fuel, and oil.

By contrast, the rates for medical and moving purposes are based solely on variable operating costs.

This distinction explains why the business rate is substantially higher than the medical and moving rates—and why all three can be influenced by rising fuel prices.

Why Didn’t the Charitable Mileage Rate Change?

The charitable mileage rate has been fixed at 14 cents per mile since 1998. Had it kept pace with inflation, it would stand at approximately 29 cents per mile today—more than double the statutory rate.

According to a 1997 Treasury Department letter, the charitable rate was set lower than the business rate primarily because it excludes costs such as depreciation, insurance, and repairs. Those expenses are not deductible as charitable contributions under Section 170 of the tax code.

How Long Has the Mileage Rate Been in Use?

The standard mileage rate dates to the 1970s, introduced as a simplification measure to reduce recordkeeping burdens.

In 1971, the IRS formally published a standard mileage rate of 10 cents per mile for business use. Adjusted for inflation, that equates to roughly 84 cents per mile today.

Even after the midyear increase to 76 cents, the current business rate remains slightly below the inflation-adjusted original rate.

How Do You Use the Mileage Rates?

Standard mileage rates calculate deductible business, moving, medical, or charitable transportation expenses. Generally, you multiply qualifying miles driven by the applicable rate.

For 2026, however, you must also track when the mileage occurred:

• Use the original rate for qualifying mileage from January 1 through June 30.
• Use the revised rate for qualifying mileage from July 1 through December 31.

If you use the standard mileage rate for a vehicle you own and use for business, you must generally elect that method in the first year the vehicle is available for business use. In subsequent years, you may generally choose between the standard mileage rate and actual expenses.

If you use the standard mileage rate for a leased vehicle, you must apply that method for the entire lease period, including renewals.

If a vehicle serves multiple purposes, you must separate personal mileage from deductible mileage. You may also apply more than one mileage rate on the same tax return.

This year, you may need to use two different rates for the same category of mileage.

How the Math Works for Mileage Rate Deductions

Suppose you drive 20,000 miles during 2026, allocated as follows:

• 10,000 personal miles.
• 2,000 charitable miles.
• 4,000 medical miles driven before July 1.
• 4,000 medical miles driven on or after July 1.

The calculation would be:

• 10,000 personal miles × $0 = $0
• 2,000 charitable miles × $0.14 = $280
• 4,000 medical miles × $0.205 = $820
• 4,000 medical miles × $0.235 = $940

In this example, deductible mileage-related expenses total $2,040, plus qualifying parking fees and tolls.

Charitable and medical mileage deductions are generally reported on Schedule A. Note that medical expenses remain subject to the 7.5 percent adjusted gross income (AGI) floor. Beginning in 2026, taxpayers who itemize may deduct charitable contributions only to the extent their total contributions exceed 0.5 percent of AGI.

If the standard mileage rates do not reflect your actual costs, you may deduct actual vehicle expenses instead—though that method demands considerably more recordkeeping.

What About Employer Reimbursements?

The timing rules also affect mileage allowances paid by employers. The revised rates apply only when both of the following conditions are met:

1. The mileage allowance is paid to the employee on or after July 1, 2026.
2. The related transportation expense was paid or incurred by the employee on or after July 1, 2026.

The original rates continue to apply if the allowance was paid before July 1 or relates to expenses incurred before July 1.

Employers should review their accountable plan policies to ensure the correct rate is applied based on when the expense was incurred and the allowance was paid.

Accountable plans reimburse employees for approved business, travel, or medical costs. To qualify, the plan must meet strict IRS guidelines: expenses must be incurred while performing job duties, employees must submit detailed substantiation, and any excess reimbursement must be returned within a reasonable period.

Who Benefits from Using the Mileage Rates?

Before 2018, unreimbursed employee business expenses were generally deductible as miscellaneous itemized deductions subject to the 2 percent AGI floor. The Tax Cuts and Jobs Act (TCJA) suspended those deductions for 2018 through 2025. Under the One Big Beautiful Bill Act (OBBBA), that suspension is now permanent, meaning most employees cannot claim a federal deduction for unreimbursed travel expenses—making employer reimbursement plans especially critical.

Similarly, most taxpayers cannot deduct moving expenses (also due to the TCJA and OBBBA). An exception applies to qualifying active-duty Armed Forces members who move under military orders for a permanent change of station. Certain intelligence community members may also qualify under rules effective for 2026.

Because charitable mileage deductions require itemizing, many taxpayers forgo them in favor of the standard deduction—for 2026, $16,100 for single filers and $32,200 for married couples filing jointly.

Nevertheless, the charitable rate remains significant for organizations and volunteers as a guideline for mileage reimbursements.

How Can I Track Mileage?

You must maintain adequate records, such as a mileage log. If a vehicle is used solely for business, beginning- and end-of-year odometer readings can establish total mileage (photographs serve as supporting evidence). You should keep detailed records showing dates, destinations, and business purposes for each trip.

If a personal vehicle serves both business and personal purposes, more granular records are necessary. A mileage-tracking app can help, though a notebook or spreadsheet also suffices.

Records should generally include:

• The date of each trip.
• The number of miles driven.
• Starting point and destination.
• The business, medical, moving, or charitable purpose of the trip.

For 2026, distinguishing mileage driven before July 1 from mileage driven on or after July 1 is particularly important.

Where Can I Find More Information?

The original 2026 standard mileage rates were published in Notice 2026-10. The IRS modified those rates in Announcement 2026-11, effective July 1, 2026. All other provisions of Notice 2026-10 remain in force.

Notice 2026-10 also includes the maximum automobile cost for calculating allowances under fixed and variable rate (FAVR) plans and the maximum fair market value of certain employer-provided automobiles for cents-per-mile and fleet-average valuation rules.

What’s Next for Taxpayers?

Meticulous recordkeeping is always essential, but the 2026 rate change demands greater precision. Dates will determine the applicable rate, so records must clearly indicate when miles were driven.

Consult your tax professional with any questions.

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