The Internal Revenue Service is bumping its optional standard business mileage rate to 76 cents per mile for trips on or after July 1, a 3.5-cent midyear increase that will immediately affect how many workers are reimbursed for hitting the road. The agency is also setting the medical and moving mileage rate at 23.5 cents per mile, while leaving the charitable mileage rate at the legally fixed 14 cents. The tweak lands in the middle of choppy fuel markets and will force many employers and drivers to split mileage logs during the June and July break.
What the IRS announced
The updated rates appear as Announcement 2026-11 in the Internal Revenue Bulletin and take effect July 1. According to Internal Revenue Bulletin 2026-29, the revised figures apply to deductible transportation expenses paid or incurred on or after July 1 and to mileage allowances paid on or after that date.
Why the IRS acted
"This modification results from recent increases in the price of fuel," the IRS explains in the bulletin, pointing to fuel price swings as the trigger for the change. Tax professionals note that midyear mileage adjustments are not the norm; the agency last made similar midyear moves in 2022 and 2011, a pattern documented by the Journal of Accountancy.
Gas prices and timing
The timing is a little awkward. The Bureau of Labor Statistics' June report shows the gasoline index dropping 9.7 percent month over month, even as drivers saw prices creep back up in early July. On Monday, AAA's survey pegged the national average at about $3.87 per gallon, highlighting the short-term volatility officials pointed to. Coverage of Michigan's fuel market also showed midsummer prices at the pump running above last year's levels. For the latest figures, see data from the Bureau of Labor Statistics and AAA.
What drivers and employers should do
Plenty of employers lean on the IRS standard as the go-to benchmark for mileage reimbursement. The rate is intended to approximate the full cost of running a vehicle, including fuel, depreciation, insurance, and repairs. Tax advisers point out that employees who are reimbursed under an accountable plan generally do not take a separate mileage deduction on a federal return, and that taxpayers always have the option to track and deduct actual vehicle expenses instead of using the standard rate, according to guidance from KPMG.
How to handle your records
If your business miles cross the July 1 cutoff, you will need to keep clean, date-stamped logs and separate miles driven before the change from miles driven after it. Preparers should update accounting and expense software and clearly document which rate applies to which trip. Tax professionals also urge employers and payroll teams to review reimbursement policies and system settings so that employees are paid at the correct rate, per the National Association of Tax Professionals.
Local and national outlets were quick to flag the bulletin, including the Detroit Free Press. If you count on mileage reimbursements to soften the blow of work travel, it is worth double-checking your employer's policy and talking with a tax preparer about whether the standard mileage rate or the actual-cost method is the better fit for your situation.
