If you drive for business, you've probably already adjusted to this year's mileage rate once. Now you have to do it again — and this time, mid-stream.
On July 1, 2026, the IRS raised the standard business mileage rate to 76 cents per mile, up from the 72.5 cents that had applied since January 1. It's only the second time the IRS has changed the rate outside its normal annual schedule since 2011 — the last one was in 2022, when gas prices spiked past $5 a gallon nationally. This time, the trigger was similar: fuel costs climbed sharply enough during the first half of 2026 that the IRS decided waiting until January 2027 wasn't reasonable.
For most people, a rate bump sounds like good news, and it is — a bigger deduction per mile driven. But a rate change that lands in the middle of a tax year creates a bookkeeping problem that a January 1 change never does: you now have two different rates applying to two different halves of the same year, and your mileage log needs to be able to tell them apart.
What Actually Changed
The new rates, effective for miles driven on or after July 1, 2026, are:
- Business use: 76 cents per mile (up from 72.5 cents — a 3.5-cent increase)
- Medical or moving purposes: 23.5 cents per mile (up from 20.5 cents; moving mileage remains limited to active-duty Armed Forces members relocating under orders, plus certain intelligence community personnel)
- Charitable use: still 14 cents per mile — this one is fixed by statute under Section 170(i) of the tax code, so it never moves regardless of fuel prices
The IRS made the change through Announcement 2026-11, which modifies the rates originally set in Notice 2026-10 back in December 2025. The stated reason is straightforward: the national average price of gas rose from roughly $2.82 per gallon in early January to about $3.89 by mid-July — a jump of nearly 38% in six months. That's a big enough swing in one of the largest variable costs of operating a vehicle that the IRS's own formula (which factors in fuel, insurance, maintenance, depreciation, and repairs) no longer matched reality for the second half of the year.
This has happened before, but rarely. Since 2011, the IRS has only deviated from its usual January 1 schedule twice: once in 2022 (58.5 cents up to 62.5 cents, again driven by a gas price spike) and now in 2026. In both cases, the increase took effect July 1 and ran through December 31.
Why This Isn't Just "A Few More Cents"
If you drive 15,000 business miles a year and split them evenly across the two halves, the math looks like this:
- First half (Jan 1 – Jun 30), 7,500 miles at 72.5 cents: $5,437.50
- Second half (Jul 1 – Dec 31), 7,500 miles at 76 cents: $5,700.00
- Total deduction: $11,137.50
Compare that to simply applying the old 72.5-cent rate across all 15,000 miles: $10,875. The rate change is worth an extra $262.50 in this example — not life-changing, but real money, and it scales up fast for anyone who drives heavily for work: a delivery driver, a home-service contractor, a real estate agent, or a sales rep easily clearing 20,000+ business miles a year could see the difference run into the high hundreds of dollars.
The catch is that you only get the higher number if your records can actually support the split. If your mileage log is just an annual total scribbled at tax time, you have no way to prove which miles happened before July 1 and which happened after — and a preparer who doesn't know to ask will likely just apply one rate to the whole year, probably the lower one, out of caution.
What Your Mileage Log Needs Now
The IRS has always required contemporaneous mileage records under Section 274(d) — logged at or near the time of the trip, not reconstructed from memory in April. A split-rate year raises the stakes on that requirement, because the date of each trip is no longer just a nice-to-have; it's the field that determines which rate applies.
At minimum, each logged trip needs:
- The date of the trip
- Starting and ending locations (or odometer readings)
- The business purpose
- Total miles driven
If you're using a GPS-based mileage app, this is largely automatic — most tools timestamp every trip and will apply the correct rate for the correct date range without you doing anything extra. If you're tracking manually in a spreadsheet or paper log, you'll need to total your pre-July-1 miles and post-July-1 miles separately when you file, rather than just summing the year and multiplying by a single rate. Don't average the two rates together — the IRS applies the actual rate in effect on each trip's date, not a blended annual figure.
Who This Affects and When
The higher rate applies to transportation expenses paid or incurred on or after July 1, 2026 — whether that's a self-employed person deducting business mileage on Schedule C, or an employer reimbursing an employee's mileage under an accountable plan. For employer reimbursements specifically, the new rate applies when the reimbursement is paid to the employee on or after July 1 and covers travel that also occurred on or after July 1. If you run payroll or handle expense reimbursements, that's worth flagging to whoever processes them, since a reimbursement policy that hasn't been updated will underpay employees for correctly-dated second-half trips.
One thing that doesn't change: this only affects people using the standard mileage rate method. If you use the actual expense method — deducting a percentage of real costs like gas, insurance, repairs, and depreciation based on business-use percentage — the mid-year IRS rate change is irrelevant to you; your deduction already reflects real-world costs as you incur them, including the same fuel price increases that prompted this adjustment in the first place.
A Reminder to Revisit Your Method, Not Just Your Rate
A mid-year change is also a natural prompt to ask a broader question: is the standard mileage rate even the better choice for your situation this year? If your actual vehicle costs — especially fuel, given the price run-up — are outpacing what 76 cents a mile covers, the actual expense method might now produce a larger deduction, particularly for a higher-cost or lower-mileage vehicle. That comparison is worth running before you file, not after, since switching methods on the same vehicle in a later year comes with its own restrictions once you've chosen a starting method for it.
Keep Your Records Straight From Here
A rate change that splits the year is exactly the kind of detail that's easy to get wrong in a spreadsheet and easy to get right with a system that timestamps every entry automatically. Beancount.io provides plain-text accounting that keeps every transaction — including mileage and vehicle expenses — dated, categorized, and auditable from the moment you record it, so a mid-year rate change is a formula update, not a scramble to reconstruct six months of trips. Get started for free and keep your books ready for whatever the IRS changes next.