The IRS has increased mileage rates in response to rising gas prices.
getty
The IRS increases standard mileage rates mid-year, citing recent increases in fuel prices.
From 1 July 2026, the optional standard mileage rates for using a car, truck, pickup or panel truck will be:
- 76 cents per mile driven for business use, up from 72.5 cents.
- 23.5 cents per mile for medical purposes, up from 20.5 cents.
- 23.5 cents per mile driven for commuting by eligible active-duty members of the Armed Forces and certain members of the intelligence community, up from 20.5 cents.
- 14 cents per mile for charity miles (unchanged).
The revised rates apply to eligible transportation costs paid or incurred on or after 1 July 2026. The rates originally announced for 2026 continue to apply to costs paid or incurred from 1 January to 30 June 2026.
This means that there are now two sets of standard mileage rates for 2026:
Why did the IRS change rates mid-year?
The IRS usually sets the optional standard mileage rates just before the tax year. This interim adjustment was prompted by the recent increases in fuel prices.
When the IRS announced the initial 2026 rates in late December, natural gas prices were near their lowest level in years. The national average for regular gasoline was about $2.89 per gallon in December 2025.
As of July 13, 2026, AAA put the national average at about $3.87 per gallon, an increase of about 98 cents, or 34%. Much of this increase reflects the disruption and uncertainty in global oil markets caused by the Iran war, including concerns about oil production and movement through the Strait of Hormuz.
As a result, the IRS increased mileage rates.
The IRS last made a mid-year mileage rate adjustment in 2022, after gas prices rose following Russia’s invasion of Ukraine. The national average hit about $5 a gallon in June amid higher crude oil prices, sanctions and worries about global energy supplies.
Why are mileage rates different for business, medical, moving and charity services?
The standard mileage rate for business use is based on an annual study of both the fixed and variable costs of running a car. These costs include depreciation, insurance, repairs, tires, maintenance, gas and oil.
In contrast, prices for medical and moving purposes are based on variable operating costs.
This explains why the business rate is significantly higher than medical and transportation rates—and why all three rates can be affected by higher fuel prices.
Why hasn’t the Charitable mileage rate changed?
The charitable mileage rate has been set at 14 cents per mile since 1998. If it kept pace with inflation, it would be about 29 cents per mile today — more than double the legal rate.
According to a 1997 Treasury letter, the charity rate was set lower than the business rate, largely because it excludes costs such as depreciation, insurance and repairs. These expenses are not deductible as charitable contributions according to article 170 of the tax code.
How long has mileage been used?
The standard mileage rate dates back to the 1970s. It was introduced as a simplification measure to reduce record keeping and red tape.
In 1971, the IRS officially published a standard mileage rate of 10 cents per mile for business use. Adjusted for inflation, that would be about 84 cents per mile today.
Even after the interim increase to 76 cents, the current business rate remains slightly lower than the initial inflation-adjusted rate.
How do you use Miles?
Standard mileage rates are used to calculate deductible business, commuting, medical or charitable transportation expenses. Generally, you multiply the number of eligible miles flown by the applicable rate.
For 2026, however, you should also know when the mileage was recorded:
- Use the original price for required mileage from January 1st to June 30th.
- Use the revised rate for required mileage from 1st July to 31st December.
If you use the standard mileage rate for a vehicle you own and use for business, you should generally choose this method in the first year the car is available for business use. In later years, you can generally choose between the standard mileage rate and actual expenses.
If you use the standard mileage rate for a leased vehicle, you must use this method for the entire lease period, including renewals.
If you use your vehicle for more than one purpose, you should separate personal mileage from deductible mileage. You can also use more than one mileage rate on the same tax return.
And this year, you may need to use two different rates for the same type of mileage.
How the math works for mileage percentage deductions
Let’s say you drive 20,000 miles during 2026. Of those miles:
- 10,000 are personal miles.
- 2,000 are charity miles.
- 4,000 are medical miles flown before July 1st.
- 4,000 are medical miles flown on or after July 1st.
You will calculate the mileage as follows:
- 10,000 personal miles × $0 = $0
- 2,000 charity miles × $0.14 = $280
- 4,000 medical miles × $0.205 = $820
- 4,000 medical miles × $0.235 = $940
In this example, the deductible mileage-related expenses would be $2,040, plus applicable parking fees and tolls.
Deductions for charitable and medical mileage are generally reported on Schedule A. Note that medical expenses are still subject to the 7.5% adjusted gross income (AGI). And, beginning in 2026, itemizing taxpayers can deduct charitable contributions only to the extent their total contributions exceed 0.5% of AGI.
If the standard mileage rates do not reflect your costs, you may be able to deduct the actual costs of the vehicle. The downside? This method requires a lot more record keeping.
What about employer refunds?
Timing rules also apply to mileage allowances paid by employers. Revised rates apply when both of the following apply:
- The mileage allowance is payable to the employee on or after 1 July 2026.
- The relevant transport costs were paid or incurred by the employee on or after 1 July 2026.
The original rates still apply if the allowance was paid before 1 July or relates to transport costs paid or incurred before 1 July.
This means employers should review their accountable policies to ensure the correct rate is applied based on when the expense was incurred and when the benefit was paid.
Employer reimbursement plans are programs that do exactly what they sound like: they reimburse employees for approved business, travel, or medical expenses. To qualify as an accountable plan, it must meet strict IRS guidelines. This means that the expenses must be incurred in the performance of work duties, employees must provide detailed evidence to support the expenses, and employees must repay any additional compensation within a reasonable time.
Who benefits from using mileage rates?
Prior to 2018, non-reimbursed employee business expenses could generally be claimed as miscellaneous itemized deductions, subject to the 2% of AGI floor. The Tax Cuts and Jobs Act (TCJA) suspended those deductions for 2018 through 2025. Now, thanks to the One Big Beautiful Bill Act (OBBBA), that remedy is permanent. This means that most workers cannot claim a federal deduction for non-reimbursed employee travel expenses. This makes these employer compensation plans especially important.
Likewise, most taxpayers cannot deduct travel expenses (also thanks to the TCJA and OBBBA). An exception applies to qualified active duty members of the Armed Forces who are being moved by military orders due to a permanent change of station. Certain members of the intelligence community may also qualify under rules that apply to 2026.
Since you must itemize your deductions to claim charitable miles, many taxpayers skip it altogether. Instead, they claim the standard deduction — for 2026, it’s $16,100 for single filers and $32,200 for married couples filing jointly.
However, the charity rate remains important to organizations and volunteers because it can serve as a guideline for mileage reimbursement.
How can I track mileage?
You must keep adequate records, such as a mileage log. If a vehicle is used solely for business purposes, odometer readings at the beginning and end of the year can help determine total mileage (consider taking photos as evidence). You should keep excellent records showing the dates, destinations and business purposes of the vehicle’s use.
If you use a personal vehicle for both business and personal purposes, you will need more detailed records. A mileage tracking app can help, but you can also use a notebook or spreadsheet.
Your files should generally include:
- The date of each trip.
- The number of miles driven.
- Your origin and destination.
- The business, medical, relocation or charitable purpose of the trip.
For 2026, it will be particularly important to distinguish kilometers traveled before 1 July from kilometers traveled on or after 1 July.
Where can I find more information?
The initial 2026 standard mileage indicators were published in Notice 2026-10. The IRS modified these values Announcement 2026-11which is effective July 1, 2026. All other provisions of Notice 2026-10 remain in effect.
Notice 2026-10 also includes the maximum car cost used to calculate entitlements under fixed and variable rate plans (FAVR plans) and the maximum fair market value of certain employer-provided cars for purposes of the cents-per-mile and fleet valuation rules.
What’s next for taxpayers?
It is always important to keep good records. But with the change in mileage rates, the 2026 mileage records should be more accurate than usual. Dates will matter, so records should show when the miles were driven to apply the correct value.
If you have questions, contact your tax professional.
