IRS Raises Standard Mileage Rates for Second Half of 20264 Min Read

Mid-year increase creates split mileage rates for 2026

The IRS has increased the optional standard mileage rates for the final six months of 2026 in response to rising fuel prices.

Under Announcement 2026-11, the revised rates apply to deductible transportation expenses paid or incurred on or after July 1, 2026. The announcement modifies the rates originally established in Notice 2026-10.

Beginning July 1, 2026, the optional standard mileage rates are:

• 76 cents per mile driven for business purposes, up from 72.5 cents during the first half of 2026
• 23.5 cents per mile driven for eligible medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The charitable mileage rate remains unchanged because it is set by statute under Internal Revenue Code Section 170(i), rather than adjusted based on operating costs or inflation.

The rates generally apply to cars, vans, pickup trucks and panel trucks, including gasoline, diesel, electric and hybrid vehicles.

Employers should update reimbursement procedures

The mid-year adjustment creates a split-year reimbursement framework for employers using the optional standard mileage rate under an accountable plan.

• Qualifying travel before July 1 should be reimbursed at the first-half rate of 72.5 cents per mile
• Qualifying travel after July 1 should be reimbursed at the second-half rate of 76 cents per mile

The date the travel occurred is critical when determining the appropriate reimbursement rate.

The revised rates apply to mileage allowances paid to an employee on or after July 1 only when the related transportation expenses were also incurred on or after that date. The rates established under Notice 2026-10 continue to apply to expenses incurred before July 1.

Businesses should review  expense-reporting platforms, reimbursement policies and payroll procedures to confirm that the updated rate is applied correctly. Employee communications may also need to be revised so travelers understand which rate applies to each trip.

Standard mileage rate versus actual vehicle expenses

The optional standard mileage rate offers a simplified way to calculate deductible vehicle costs, though taxpayers may instead use actual expenses such as fuel, maintenance and depreciation.

Eligibility rules apply, and some taxpayers may be required to use or continue using a specific method.

Regardless of the method used, taxpayers and employers should maintain records documenting the date, mileage, destination and business purpose of each trip.

Businesses with questions about applying the revised rates, administering accountable plans or deducting vehicle expenses should consult their tax advisor.