IRS Raises Business Mileage Rate to 76 Cents as Fuel Costs Climb
WASHINGTON — The US Internal Revenue Service has raised the standard mileage rate for business travel to 76 cents per mile, offering additional tax relief to businesses and self-employed workers facing higher fuel and vehicle operating costs.
The revised rate applies to eligible business miles driven from July 1 through December 31, 2026, according to an IRS announcement. It represents an increase of 3.5 cents from the 72.5-cent rate that applied during the first six months of the year.
The midyear adjustment follows recent increases in fuel prices and means taxpayers will need to apply two separate mileage rates when calculating deductions for the 2026 tax year.
Business travel undertaken between January 1 and June 30 will continue to be calculated at 72.5 cents per mile, while journeys from July 1 onward will qualify for the new 76-cent rate.
The standard mileage rate provides an optional method for calculating the deductible cost of using a vehicle for business purposes. Eligible taxpayers may use the rate instead of calculating actual expenses such as fuel, maintenance, depreciation, insurance and repairs.
The rate applies to gasoline, diesel, hybrid and fully electric vehicles, reflecting broader vehicle ownership and operating costs rather than fuel expenses alone.
The IRS also increased the mileage rate for eligible medical travel and qualified moving expenses to 23.5 cents per mile, up from 20.5 cents during the first half of 2026.
The charitable mileage rate remains unchanged at 14 cents per mile because it is fixed by federal law rather than adjusted administratively by the IRS.
The business deduction is particularly relevant to self-employed workers, independent contractors, small-business owners and gig-economy drivers who use their vehicles to generate income.
However, ordinary commuting between a person’s home and regular workplace generally does not qualify as deductible business mileage. Employees may also face restrictions on deducting unreimbursed vehicle expenses under federal tax rules.
Taxpayers seeking to claim the deduction will need to maintain accurate records showing the date, distance and business purpose of each eligible journey, while separating miles driven before and after July 1.
The increase is an unusual midyear intervention by the IRS, which normally sets standard mileage rates once annually. The agency previously introduced a midyear adjustment in 2022 following a sharp rise in fuel prices.
For every 1,000 eligible business miles driven during the second half of 2026, the revised rate would generate a $760 deduction, compared with $725 under the rate applied during the first half of the year.
The deduction reduces taxable business income rather than providing a direct reimbursement or dollar-for-dollar reduction in the amount of tax owed.