Published by William Buscher, CPA | July 2026
If you drive for your business, this news affects your tax deduction for the second half of 2026 — and it’s worth knowing about right now, while you still have time to act on it.
On July 13, 2026, the IRS announced a mid-year increase to the standard mileage rate, citing a sharp rise in fuel costs. This kind of mid-year adjustment is rare — the last time it happened was 2022 — which makes it worth paying attention to.
Here’s everything you need to know, in plain language.
What Is the Standard Mileage Rate?
When you use your personal vehicle for business purposes, the IRS allows you to deduct the cost of that driving on your tax return. You have two ways to calculate that deduction:
Option 1 — Standard Mileage Rate: Multiply the total business miles you drove by the IRS rate for that year. Simple math, minimal recordkeeping beyond tracking your miles.
Option 2 — Actual Expense Method: Track every dollar you spent on the vehicle — gas, insurance, repairs, registration, depreciation — and deduct the percentage that represents business use.
The standard mileage rate is by far the simpler option, and for most small business owners and self-employed individuals, it produces a comparable or better deduction with far less hassle. That’s why the rate matters.
What Are the 2026 Rates?
Here’s where things get a little nuanced this year, because the rate changed mid-year.
January 1 – June 30, 2026: 72.5 cents per mile This was the rate the IRS set at the start of the year — already an increase of 2.5 cents from the 2025 rate of 70 cents per mile.
July 1 – December 31, 2026: 76 cents per mile (new) The IRS raised the rate by 3.5 cents effective July 1, 2026, driven by a significant increase in fuel prices. According to AAA data cited in the IRS announcement, the average price of regular gasoline rose from $2.819 per gallon in early January to $3.890 per gallon in mid-July — an increase of roughly 38%.
At 76 cents per mile, the current business mileage rate is the highest it has ever been.
For reference, here’s the full 2026 rate table:
| Purpose | Jan 1–Jun 30 | Jul 1–Dec 31 |
|---|---|---|
| Business | 72.5¢ per mile | 76¢ per mile |
| Medical / Moving* | 20.5¢ per mile | 23.5¢ per mile |
| Charitable | 14¢ per mile | 14¢ per mile |
*Moving expenses apply only to certain active-duty military members and qualifying intelligence community personnel.
What Does This Actually Mean in Dollars?
Let’s make this concrete. Say you drive 10,000 business miles per year, split roughly evenly between the two halves of the year.
- First half (5,000 miles × $0.725) = $3,625
- Second half (5,000 miles × $0.76) = $3,800
- Total deduction: $7,425
At the old full-year rate of 72.5 cents, that same 10,000 miles would have produced a $7,250 deduction. The mid-year increase adds $175 to your deduction for the year — not life-changing, but real money, and it grows proportionally the more you drive.
For business owners like Realtors and other traveling sales professionals driving 25,000 miles per year, the difference is closer to $437 in additional deductions.
Who Can Use the Standard Mileage Rate?
Any self-employed individual, sole proprietor, S-Corp owner, or business owner who uses their personal vehicle for business purposes can use this deduction. Common qualifying business trips include:
- Driving to meet clients
- Traveling between job sites or properties
- Running business errands (supplies, bank, post office)
- Driving to a temporary work location
- Real estate investors driving to rental properties to manage or inspect them
- Realtors showing clients properties
What doesn’t count: Your commute from home to your regular office. That’s personal mileage in the eyes of the IRS, even if you’re driving to your own business location.
The One Thing That Can Cost You This Deduction
The mileage deduction is legitimate, legal, and valuable — but the IRS requires documentation to claim it. And “I drove a lot for work” is not documentation.
To substantiate a mileage deduction, your records need to capture four things for each business trip:
- Date of the trip
- Destination (where you went)
- Business purpose (why you went)
- Miles driven
Without these, the deduction is at risk in an audit. With them, it’s airtight.
Practical Tips for Tracking Mileage
Here’s where most business owners fall down — not on the deduction itself, but on keeping records clean enough to support it. A few approaches that actually work:
Use a mileage tracking app. This is the easiest and most reliable method. Apps like MileIQ, Everlance, or Stride run in the background on your phone, detect when you’re driving, and log trips automatically. You swipe to classify each drive as business or personal. Takes about 10 seconds per trip and produces an IRS-compliant report at year-end. Most have a free tier that covers basic tracking.
If you prefer a manual log: A simple spreadsheet or even a notebook kept in your car works fine. Date, destination, purpose, odometer reading. The habit is what matters — it’s much easier to log a trip right after it happens than to reconstruct months of driving in March.
Record your odometer at January 1 and December 31. This gives you your total annual mileage, which is useful context if your return is ever reviewed. Your business miles should be a reasonable percentage of your total miles driven.
Don’t mix personal and business in your head. If you make a personal stop on a business trip, only the business portion of the mileage is deductible. Tracking apps handle this automatically. If you’re logging manually, just note the detour.
Standard Mileage vs. Actual Expenses — Which Is Better?
This is a question worth asking at least once, especially if you drive a newer vehicle, drive a high number of miles, or have a vehicle with significant depreciation.
The standard mileage rate is designed to cover gas, insurance, maintenance, and depreciation all in one simple number. For most business owners with a mid-range vehicle driving a typical number of miles, it’s competitive with the actual expense method and much simpler.
The actual expense method can produce a larger deduction if you drive a vehicle with high operating costs or significant depreciation — particularly if you’re eligible for bonus depreciation in the year you placed the vehicle in service. However, once you start with the actual expense method on a given vehicle, you generally can’t switch to the standard mileage rate for that vehicle in a later year. The reverse is also true for leased vehicles — if you use the standard mileage rate from the start, you must use it for the life of the lease.
This is a decision worth making intentionally, ideally at the beginning of the year or when you first place a vehicle in service. If you’re unsure which method makes more sense for your situation, that’s a good question to bring to your CPA.
A Quick Note on Timing
Because the rate changed on July 1, you’ll need to calculate your deduction in two parts this year — first half at 72.5 cents, second half at 76 cents. A mileage tracking app handles this automatically. If you’re tracking manually, just make sure your log is organized by date so you can sort miles into the correct period.
Bottom Line
The IRS mileage rate increase to 76 cents per mile is good news for business owners who drive. If you’re already tracking your mileage, your deduction just got a little bigger for the second half of the year. If you haven’t been tracking, this is a good reminder that there’s real money being left on the table — and the barrier to capturing it is nothing more than a free app and a few seconds per drive.
If you have questions about vehicle deductions, whether the standard mileage rate or actual expense method makes more sense for your situation, or any other tax planning questions, I’m happy to talk. The first conversation is always free.
William Buscher is a CPA and licensed Missouri Realtor serving small business owners and real estate investors through Amplifi Accounting, LLC, based in St. Louis County, Missouri.
Sources: IRS Announcement 2026-11; IRS Notice 2026-10; Historical Mileage Rate
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