If you drive for business, medical care, or a military move, your mileage deduction just got a mid-year bump. It’s worth understanding why, because a mid-year change to the IRS mileage rate doesn’t happen often.
The rare mid-year rate change
The IRS typically sets its optional standard mileage rate once a year, in December, for the year ahead. It has only broken that pattern twice since 2011, once in 2022, and now again in 2026 (Beancount).
In Announcement 2026-11, published in Internal Revenue Bulletin 2026-29, the IRS revised the optional standard mileage rates it set back in December 2025 under Notice 2026-10. The reason is simple. Fuel got expensive, fast. The American Automobile Association reported that the average price of a gallon of regular gasoline rose from $2.819 on January 8 to $3.890 on July 15, a 38% jump in about six months.
Because the standard mileage rate is built from a study of what it actually costs to operate a vehicle, and fuel is one of the biggest variable costs in that formula, the IRS decided the December rate no longer reflected reality and needed adjusting mid-stream.
What changed, effective July 1
| Purpose | Jan. 1 – June 30, 2026 | July 1 – Dec. 31, 2026 |
|---|---|---|
| Business | 72.5 cents/mile | 76 cents/mile |
| Medical / moving | 20.5 cents/mile | 23.5 cents/mile |
| Charitable | 14 cents/mile | 14 cents/mile (unchanged) |
A few things worth flagging:
- The charitable rate never moves. It’s fixed by statute under Section 170(i) of the Internal Revenue Code, so no fuel price swing changes it.
- Everything else in Notice 2026-10 still applies. This announcement only touches the mileage rates and the substantiation amounts tied to them. It doesn’t reopen or revise any other guidance from the original notice.
- You’ll need to split your 2026 mileage log. Miles driven January through June get the old rate. Miles driven July 1 forward get the new one. When you file your 2026 return next year, this split will matter.
Why this matters for you
If you’re self-employed or a business owner deducting vehicle expenses on the standard mileage method, your second-half business driving is now worth more per mile on your return, but only if your mileage log clearly separates the two periods. Now is a good time to make sure your tracking app or logbook is set up to capture the July 1 breakpoint automatically.
If your business reimburses employees for mileage, remember the IRS rate is optional, not mandatory. But most accountable plans tie reimbursements to the IRS mileage rate to stay tax-free for employees. If that’s your setup, update your reimbursement rate to 76 cents per mile for travel on or after July 1, and confirm your payroll or expense software reflects the change. The new rate only applies when both the reimbursement is paid on or after July 1 and the travel it covers happened on or after July 1.
If you’re using the actual expense method instead of the standard mileage rate, this change doesn’t affect you directly. Your deduction already tracks real costs, fuel included, as you incur them.
The bottom line
Mid-year IRS rate changes are rare enough that many taxpayers and even some payroll systems miss them entirely. This is the first change to the IRS mileage rate since 2022, and it’s a useful reminder to check that your mileage tracking, reimbursement policy, and payroll settings are keeping pace with the rules. Not just once a year, but whenever the IRS decides the numbers no longer add up.
If you want help updating your reimbursement policy, sorting out how to split your 2026 mileage log, or simply want a second set of eyes on your vehicle deduction strategy before year-end planning starts, we’re here to help. Reach out to us anytime.
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