The IRS has officially announced a mid-year increase to the standard business mileage rate, raising it from 72.5 cents to 76 cents per mile effective July 1, 2026. This is only the second mid-year rate adjustment in the past decade the last was in July 2022 and it has immediate implications for anyone who drives a personal vehicle for work.
If you are self-employed, a freelancer, a gig worker, or a business that reimburses employees for mileage, here is what changed, why it changed, and what you need to do before this rate goes into effect.
The IRS issued Announcement 2026-11 on July 13, 2026, modifying Notice 2026-10, which had set the original 2026 rates in December 2025. Effective July 1, the business mileage rate increases by 3.5 cents per mile, from 72.5 cents to 76 cents. The medical and moving mileage rate also increases, from 20.5 cents to 23.5 cents per mile. The charitable mileage rate stays unchanged at 14 cents it is set by statute and the IRS cannot adjust it mid-year
76¢/mile is the highest business mileage rate on record. Miles driven on or after July 1, 2026 are deductible at the new rate miles driven before July 1 remain at 72.5¢.
Mid-year adjustments are rare precisely because they signal that costs have shifted fast enough that waiting until January would leave drivers materially undercompensated. Three converging factors drove this decision.
Fuel prices surged. National average gas prices rose approximately 38% between January 8 and July 15, 2026 from $2.819 to $3.890 per gallon, according to the American Automobile Association. Fuel is the single most variable component in the IRS mileage calculation, so a spike of this magnitude creates enough pressure to force a mid-year review.
Vehicle maintenance and repair costs remained elevated. Parts prices, labor rates, and tire replacement costs have all run above historical averages for the past two years. Combined with high fuel, these costs pushed the real per-mile cost well above the January rate.
Insurance premiums are at multi-year highs. Personal and commercial vehicle insurance costs surged in 2024–2025 and have carried into 2026. When fuel, maintenance, and insurance all rise simultaneously, the IRS acts and in 2026, all three moved in the same direction at once.
Because the rate changed mid-year, 2026 requires you to apply two different rates depending on when your miles were driven:
● January 1 – June 30, 2026: 72.5¢ per mile
● July 1 – December 31, 2026: 76¢ per mile
This is the most important administrative implication of the announcement. In a normal year, you multiply your total annual business miles by one rate. In a split-rate year, your records need to clearly reflect the date of each trip not just the total. A mileage tracking app will handle the split automatically. If you keep manual logs, confirm that every trip entry from June and July is properly dated before you close out those months.
To put the rate change in concrete terms: if you drive 10,000 business miles during the July–December period at 76¢, that is $7,600 in deductible expenses $350 more than the same mileage would have generated at 72.5¢. For high-mileage workers such as delivery drivers, field sales reps, or real estate agents, this gap compounds significantly over a full half-year of driving.
Need the full deduction breakdown by mileage level? See mileage deduction examples and calculations → →
The rate change is effective July 1. That date is already past which means if you have been driving for work in July and beyond, the new rate is already the applicable rate for those miles. Here is what each group needs to do.
Your mileage app or manual log should already be capturing trips at 76¢ for any drive on or after July 1. If you have not confirmed that your tracking tool has updated to the new rate, do that now. Your Schedule C deduction for the second half of 2026 will be calculated using 76¢ every mile without a dated, documented record is a deduction you cannot claim.
Rideshare drivers, delivery couriers, and platform-based contractors typically log some of the highest annual business mileages of any worker category. A 3.5¢ increase adds up fast. At 20,000 miles in the second half of the year, the new rate produces $700 more in deductions than the previous rate. Make sure your mileage tracker is logging every trip dated July 1 onward at the new rate.
If you use the standard mileage rate for your own business driving, the rate for any trip on or after July 1 is 76¢. Update your records accordingly. If you also reimburse employees for mileage, see the employer section below.
This is the section most likely to create administrative problems if it is overlooked. If your organization reimburses employees for business mileage at the IRS standard rate, the reimbursement rate must be updated to 76¢ effective July 1, 2026. Reimbursements paid at or below the IRS rate are not taxable income to the employee. Reimbursements paid above the IRS rate are treated as taxable wages for the excess so alignment with the published rate matters for both compliance and payroll accuracy.
Specifically, before your next expense reimbursement cycle you should:
● Update your expense management platform or reimbursement policy to reflect 76¢/mile for business trips dated July 1 or later
● Communicate the rate change to employees who submit mileage expense reports
● Confirm that any mileage submitted for July trips has been or will be calculated at the new rate, not the January rate
● If your organization uses a fixed reimbursement rate rather than the IRS standard, review whether that rate is still adequate given the 3.5¢ increase underpaying relative to actual costs can affect employee retention on the margin
For HR teams running FAVR (Fixed and Variable Rate) programs, this mid-year adjustment is a prompt to review whether your variable rate component still reflects current fuel prices in the relevant employee locations. The IRS rate change signals that national fuel costs have shifted materially local costs may have shifted even more depending on geography.
The rate has already changed. These steps take less than ten minutes and ensure you are capturing the full value of the new rate from July 1 onward.
If you use Everlance or another mileage tracking app, check that it is applying the 76¢ rate to trips logged from July 1 onward. Everlance updates rates automatically your deduction summary will reflect the correct rate without any manual adjustment.
Your July records are the most important to get right. In a split-rate year, any trip logged without a clear date cannot be definitively assigned to either rate period. A one-day gap in your log during late June or early July creates an audit risk. If you see gaps, fill them now while the trips are still fresh.
Before the end of July, tally your total business miles driven January 1 through June 30. This is your H1 mileage total, deductible at 72.5¢. Locking it in now before year-end tax prep means you will not be reconstructing this figure from memory in April.
Track every July 1 mile at the new rate automatically. Download the Everlance app → →
The 2026 mid-year rate puts the current business mileage rate at its highest level in recent memory. From 56¢ in 2021, the rate has risen to 76¢ in the second half of 2026 a 35.7% increase in five years. The two red bars in the trend represent the only mid-year adjustments in that period: July 2022 and July 2026. Both were triggered by fuel price spikes that moved faster than the annual review cycle could accommodate.
For full historical rate data going back to 2014, including context on what drove each year's change:
See current and historical IRS mileage rates →
This post covers the announcement and its immediate implications what changed, when, why, and what to do now. For the complete picture on the standard mileage rate, including:
● All current 2026 mileage rates by category
● Full mileage deduction calculation methodology and examples
● IRS rules on who qualifies and what trips count
● Standard mileage rate vs. actual expenses comparison
● Historical rates by year (2014–2026)
visit the Everlance IRS mileage rate guide:
Everything you need to understand and apply the standard mileage rate: See the full IRS mileage rate guide → →
These questions focus specifically on the mid-year announcement and the July 1 effective date. For broader questions about the standard mileage rate, deduction rules, and eligibility, see the
The IRS just raised the rate, make sure every mile is counted.
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