IRS Raises 2026 Mileage Rate to 76 Cents per Mile

Introduction

The IRS has announced a midyear increase to the standard mileage rate for business travel, giving employers and eligible taxpayers a new rate to use for the remainder of 2026. Because the change takes effect halfway through the year, businesses will need to apply different mileage rates depending on when the travel occurred. Reviewing reimbursement policies and mileage tracking procedures now can help ensure compliance and accurate reporting.

What is changing?

Beginning July 1, 2026, the IRS standard mileage rates are:

• Business: 76 cents per mile, up from 72.5 cents
• Medical or qualifying moving expenses: 23.5 cents per mile, up from 20.5 cents
• Charitable service: Remains 14 cents per mile

The business mileage rate applies to all vehicle types, including gasoline, diesel, hybrid electric, and fully electric vehicles.

Which mileage rate applies in 2026? 

Because the IRS made this change in the middle of the year, two business mileage rates apply in 2026:

• January 1 through June 30, 2026: 72.5 cents per mile
• July 1 through December 31, 2026: 76 cents per mile
  
  

Businesses should ensure mileage records clearly separate travel before and after July 1 to apply the correct rate.

Who does this affect? 

The updated rate may apply to:

• Employers that reimburse employees for business use of personal vehicles.
• Self-employed individuals who use the IRS standard mileage method to calculate deductible business vehicle expenses.
• Employers using the IRS cents-per-mile valuation method for certain company-owned or leased nonluxury vehicles.

If your organization reimburses mileage, now is a good time to review your payroll and expense reimbursement procedures to confirm they reflect the updated rate.

Important reminder for employees 

Although the business mileage rate increased, most employees still cannot claim a federal tax deduction for unreimbursed business mileage. According to the IRS, the deduction for unreimbursed employee business expenses is no longer available under current federal tax law.

What should businesses do next? 

To prepare for the second half of 2026, businesses should:

• Update mileage reimbursement rates effective July 1, 2026.
• Verify payroll and expense reporting systems use the correct rate.
• Maintain accurate mileage logs that distinguish travel before and after July 1.
• Review company reimbursement policies and communicate the updated rate to employees who regularly travel for business.

Our team can help you determine how the updated mileage rates affect your business and ensure your reimbursement practices remain compliant with current IRS guidance.

FAQs about the IRS mileage rate update

Why did the IRS increase the mileage rate? 

According to the IRS, the increase reflects higher transportation costs, including recent increases in fuel prices. 

When does the new IRS mileage rate take effect? 

The new business mileage rate of 76 cents per mile applies to business miles driven on or after July 1, 2026. 

Does the new rate apply to electric vehicles? 

Yes. The standard mileage rate applies to gasoline, diesel, hybrid electric, and fully electric vehicles. 

Can employees deduct unreimbursed business mileage on their federal tax returns? 

Generally, no. Most employees cannot deduct unreimbursed business expenses, including business mileage, under current federal tax law.

Conclusion and next steps

Although the business mileage rate increased, most employees still cannot claim a federal tax deduction for unreimbursed business mileage. According to the IRS, the deduction for unreimbursed employee business expenses is no longer available under current federal tax law.

For guidance on the updated IRS mileage rates, Trout CPA's Payroll Administration team can help you review your reimbursement practices, update payroll processes, and maintain compliance with current IRS requirements. Learn more about our Payroll Administration Services to keep your mileage reimbursement policies accurate, efficient, and aligned with your business needs.