Key Takeaways
The IRS increased the optional standard mileage rates for business, medical and certain moving purposes for mileage driven on or after July 1, 2026. Businesses, self-employed individuals and taxpayers who use the standard mileage rate should separate first-half and second-half mileage to apply the correct rate and maintain accurate records.
The IRS has announced a midyear increase to the optional standard mileage rates used to calculate deductible vehicle costs for business, medical and certain moving purposes. Effective July 1, 2026, the business mileage rate increased to 76 cents per mile, up from 72.5 cents per mile for the first half of the year.
The change reflects higher fuel costs and marks the first midyear adjustment to the standard mileage rate since 2022. For businesses, self-employed individuals and employees who submit mileage for reimbursement, the update creates an important need to apply the correct rate based on when the travel occurred.
What Changes for the Second Half of 2026?
For mileage driven on or after July 1, 2026, the revised optional standard mileage rates are:
| Use of Vehicle | Jan. 1 through June 30, 2026 | July 1 through Dec. 31, 2026 |
| Business | 72.5 cents per mile | 76 cents per mile |
| Medical | 20.5 cents per mile | 23.5 cents per mile |
| Moving for eligible taxpayers | 20.5 cents per mile | 23.5 cents per mile |
| Charitable | 14 cents per mile | 14 cents per mile |
The charitable mileage rate remains unchanged because it is set by statute. The business, medical and moving rates may be updated by the IRS based on vehicle operating costs, including fuel prices.
Why the Update Matters
Although the change may seem small on a per-mile basis, it can add up quickly for businesses with frequent employee travel, field work, client visits, service routes or other mileage-heavy operations. Employers that reimburse employees using the IRS standard mileage rate should review their expense policies, payroll systems and reimbursement procedures to confirm the new rate is applied only to qualifying mileage driven on or after July 1.
Self-employed individuals and business owners should also be careful when preparing 2026 tax records. Mileage from the first half of the year should be calculated using the original 2026 rate, while mileage from July through December should use the revised rate. Applying one rate to the entire year could overstate or understate the deduction.
Key Action Steps for Businesses
Update reimbursement systems. Confirm that expense reporting, payroll and accounting systems reflect the 76-cent rate for business miles driven on or after July 1, 2026.
Communicate the change to employees. Employees who submit mileage should understand which rate applies and how to document travel dates.
Separate first-half and second-half mileage. Maintain records that clearly distinguish mileage driven before and after July 1.
Review accountable plan procedures. Businesses should ensure reimbursements are supported by timely, complete and accurate documentation.
Evaluate whether the standard rate is still the best method. In some cases, tracking actual vehicle expenses may produce a different tax result.
Documentation Remains Essential
The standard mileage rate can simplify the process of calculating deductible vehicle costs, but it does not eliminate the need for proper records. Taxpayers should maintain mileage logs that include the date of each trip, starting point, destination, business purpose and number of miles driven. For businesses, consistent documentation also helps support employee reimbursements and reduces the risk of issues during review or audit.
Moving and Medical Mileage Considerations
The revised medical and moving rates may also be relevant for certain taxpayers. The medical mileage rate applies when vehicle use qualifies as transportation primarily for and essential to medical care. The moving mileage rate is limited to eligible taxpayers, including certain active-duty members of the Armed Forces and certain members of the intelligence community. Taxpayers should confirm eligibility before claiming these deductions.
Planning Ahead
Midyear rate changes can create confusion if policies and records are not updated promptly. Businesses should review their internal processes now, especially if they reimburse employees for mileage or rely on vehicle-related deductions. Taking action early can help ensure accurate reimbursements, cleaner tax records and better support for year-end reporting.
If you have questions about how the updated mileage rates may affect your business, employee reimbursement policy or 2026 tax planning, contact Gary Gruner or your Windham Brannon tax advisor for guidance.
Frequently Asked Questions
What is the new business mileage rate for the second half of 2026? For qualifying business miles driven on or after July 1, 2026, the optional standard mileage rate is 76 cents per mile.
Do the new mileage rates apply to the entire year? No. Mileage from Jan. 1 through June 30 should use the original 2026 rates, while mileage from July 1 through Dec. 31 should use the revised rates.
Why did the IRS adjust the mileage rates midyear? The IRS made the adjustment in response to higher vehicle operating costs, including increased fuel prices.
What records should taxpayers keep? Taxpayers should keep mileage logs that include the date, starting point, destination, business purpose and miles driven for each trip.
