IRS Mileage Rate Change July 2026: Two Rates
The IRS made a mid-year mileage rate change, raising the business rate to 76¢ on July 1, 2026. How to split your miles between both rates on Schedule C.
EveryLastMile
On July 1, 2026, the business standard mileage rate went from 72.5¢ to 76¢. The IRS made this rare mid-year rate change in Announcement 2026-11, published in Internal Revenue Bulletin 2026-29. The reason was fuel prices, which climbed roughly 34% between December and July.
That is a 3.5¢ raise on every business mile you drive for the rest of the year. Good news, mostly.
Here is the part that isn’t in the headline. You now have two rates in one tax year, and the date of each trip decides which rate applies. Not your average for the year. Not the rate on the day you file. The date you drove. That turns the date field in your mileage log from a formality into a number that changes your deduction — and, if you can’t produce it, a number that can cost you the deduction entirely.
This article covers what changed, what didn’t, how to split your miles correctly, and what a split-rate year does to your audit exposure. Two full worked examples with the SE tax and QBI math included, because “your deduction went up $560” is not the same as “you keep $560.”
Key takeaways
- The business rate is 72.5¢ for miles driven January 1 through June 30, 2026, and 76¢ for miles driven July 1 through December 31, 2026 (Announcement 2026-11, modifying Notice 2026-10).
- The medical and moving rate rose from 20.5¢ to 23.5¢ on the same date. The charitable rate stays at 14¢ — it’s set by statute (§170(i)) and the IRS can’t change it mid-year.
- There is no blended or average rate. You multiply each period’s miles by that period’s rate and add the two together.
- The depreciation portion of the standard rate (35¢), the FAVR cost cap ($61,700), and the standard-mileage method election under Rev. Proc. 2019-46 all stayed the same. Only the multiplier moved.
- A mileage log without dates cannot be split between the two periods. Under §274(d), that’s not a rounding problem — it’s a substantiation failure, and courts don’t let you estimate your way out of it.
What changed on July 1, 2026
The IRS issued Announcement 2026-11 on July 13, 2026, modifying the rates it had set for the year in Notice 2026-10 back in December 2025. The Announcement gives one reason: the increase in the price of fuel. The national average gasoline price rose from about $2.89 per gallon in December 2025 to about $3.87 in mid-July 2026, driven by conflict in the Middle East and disruption to oil moving through the Strait of Hormuz.
Here is the full 2026 rate picture:
| Purpose | Jan 1 – Jun 30, 2026 | Jul 1 – Dec 31, 2026 |
|---|---|---|
| Business | 72.5¢ | 76¢ |
| Medical | 20.5¢ | 23.5¢ |
| Moving (Armed Forces on active duty; certain intelligence-community members) | 20.5¢ | 23.5¢ |
| Charitable | 14¢ | 14¢ |
The medical rate matters if you’re deducting travel for medical care as an itemized deduction under §213. The moving rate is narrow: §217 is suspended for most taxpayers, and only Armed Forces members moving under military orders — plus certain intelligence-community members for 2026 — can still use it.
Charitable mileage stays at 14¢ because Congress wrote that number into §170(i). The IRS adjusts the business and medical rates administratively based on cost studies. It has no authority to touch the charitable rate. If you drive for a nonprofit, your rate did not move, and it has not moved since 1998.
What did not change
Three things that could have moved, didn’t. Each one saves you a headache.
The depreciation portion of the business rate is still 35¢ per mile. This is the piece of the standard rate treated as depreciation, and it reduces your vehicle’s basis when you eventually sell or trade it. Announcement 2026-11 changed the rate you multiply by, not the depreciation component inside it. So your basis reduction for 2026 is 35¢ times all business miles, both halves of the year, at one uniform figure. The IRS handled the 2022 mid-year change the same way.
The FAVR standard automobile cost cap is still $61,700. So is the cents-per-mile and fleet-average vehicle fair market value cap. If you run a FAVR reimbursement plan, the cap you set in January still applies.
Your method election didn’t change. Rev. Proc. 2019-46 requires you to elect the standard mileage rate in the first year you place a vehicle in business service if you want the option to switch methods later. A rate change is not a method change. You are not forced into actual expenses, you don’t get a fresh election, and nothing about your 2026 choice reopens. If you’re weighing the two methods generally, we cover the trade-off in our Standard Mileage vs. Actual Expenses pillar →.
Which rate applies to which mile
The rule is the trip date. Not the invoice date, not the payment date, not the filing date.
- Drove it on June 30? 72.5¢.
- Drove it on July 1? 76¢.
- Drove it on December 28? 76¢.
For employer reimbursements, Announcement 2026-11 uses a two-part test. The revised rate applies to allowances paid to an employee on or after July 1, 2026, and for transportation expenses the employee paid or incurred on or after July 1, 2026. Both conditions. An employer reimbursing June miles in a July payroll run uses the June rate for those miles.
If you’re a fiscal-year filer, the cutoff is still July 1 on the calendar. The rate periods don’t bend to your fiscal year.
Why the date on every trip suddenly matters
In a normal year, the date on a trip entry proves one thing: the trip happened inside the tax year. Nobody looks closely. In 2026, the date determines which of two rates applies to that specific mile.
That’s a 3.5¢ swing per business mile. On 15,000 second-half miles, it’s $525 of deduction. Small. Not nothing.
The real exposure is different, and larger.
Your car is listed property under §280F(d)(4). That means deductions for it fall under IRC §274(d), which requires you to substantiate four elements for every trip, by adequate records or sufficient corroborating evidence:
- Amount — the mileage
- Time — the date of the trip
- Place — the destination
- Business purpose — why you went
See Treas. Reg. §1.274-5 and Temp. Reg. §1.274-5T(b)(6) and (c)(2). The “time” element has always been mandatory. It was just rarely the thing that broke a case, because in a single-rate year the date is only load-bearing at the year boundary.
Now it’s load-bearing 365 days a year. A log that says “22,000 business miles, mostly deliveries” was already inadequate under §274(d). In 2026 it’s also arithmetically unusable — there is no honest way to allocate those miles between 72.5¢ and 76¢ without knowing when each one happened.
§274(d) is all-or-nothing. Adequate records get you the deduction. Inadequate records get you zero, not a haircut. And the Cohan rule — the old Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930) doctrine that lets courts estimate a deduction when records are imperfect — is expressly unavailable for listed property. Temp. Reg. §1.274-5T says so directly. The Tax Court applies it that way without much sympathy.
How to calculate a split-rate year
The mechanics are simple. Two buckets, two rates, one sum.
- Total your business miles driven January 1 through June 30. Multiply by 72.5¢.
- Total your business miles driven July 1 through December 31. Multiply by 76¢.
- Add them. That’s your deduction, reported on Schedule C, Part II, Line 9 (Car and truck expenses).
No new form. No special election. No attachment. Schedule C Part IV asks for your total business miles for the year — you still report the combined total there — but the dollar figure on Line 9 comes from the two-bucket math.
Worked example 1: Maya, full-time gig driver
Maya drives for DoorDash and Uber in Phoenix. She’s single, files Schedule C, and uses the standard mileage rate on a paid-off Corolla.
Her 2026 numbers:
| Item | Amount |
|---|---|
| Gross receipts (1099-NEC + 1099-K) | $78,000 |
| Business miles, Jan 1 – Jun 30 | 12,000 |
| Business miles, Jul 1 – Dec 31 | 16,000 |
| Other business expenses (phone, insurance, tolls, supplies) | $3,200 |
Step 1 — Split the mileage deduction.
| Period | Miles | Rate | Deduction |
|---|---|---|---|
| Jan 1 – Jun 30 | 12,000 | 72.5¢ | $8,700 |
| Jul 1 – Dec 31 | 16,000 | 76¢ | $12,160 |
| Total | 28,000 | — | $20,860 |
Step 2 — Net Schedule C profit. $78,000 − $3,200 − $20,860 = $53,940
Step 3 — SE tax base. $53,940 × 92.35% = $49,814 (§1402(a)(12))
Step 4 — SE tax. $49,814 × 15.3% = $7,622 She’s well under the $184,500 Social Security wage base, so the full 15.3% applies.
Step 5 — Half SE tax adjustment. $7,622 ÷ 2 = $3,811 (above the line) AGI: $53,940 − $3,811 = $50,129
Step 6 — Marginal federal rate. Taxable income before QBI: $50,129 − $16,100 standard deduction = $34,029. The 22% bracket starts at $50,400 for single filers in 2026, so Maya sits in the 12% bracket.
Step 7 — QBI status. Rideshare and delivery driving is not an SSTB, and Maya is nowhere near the §199A threshold anyway. Her QBI deduction is limited by 20% of taxable income, not 20% of QBI: 20% × $34,029 = $6,806. Taxable income lands at $27,223.
Step 8 — Combined cash tax savings from the mileage deduction.
Run it without the deduction and the difference shows up:
| With mileage deduction | Without | |
|---|---|---|
| Net Schedule C profit | $53,940 | $74,800 |
| SE tax | $7,622 | $10,569 |
| Taxable income | $27,223 | $42,732 |
| Income tax at 12% on the difference | — | +$1,861 |
- SE tax savings: $10,569 − $7,622 = $2,947
- Income tax savings: $15,509 × 12% = $1,861
- Total cash savings: $4,808
Step 9 — Per-mile net value. $4,808 ÷ 28,000 = about 17¢ of real money per business mile.
What the July change is worth to Maya specifically. Had the rate stayed at 72.5¢ all year, her deduction would be $20,300 instead of $20,860. Running the full stack on that $560 difference: $79 less SE tax, $50 less income tax. $129 in her pocket.
Modest. But it’s $129 she only gets if her log can prove which 16,000 miles fell after July 1.
Worked example 2: Devon, real estate agent
Devon sells residential real estate outside Denver. Single, Schedule C, standard mileage on a leased SUV. His second half is busier — listings, showings, closings.
| Item | Amount |
|---|---|
| Gross commissions | $164,000 |
| Business miles, Jan 1 – Jun 30 | 7,500 |
| Business miles, Jul 1 – Dec 31 | 11,500 |
| Other business expenses (desk fees, MLS, E&O, marketing, phone) | $38,000 |
Step 1 — Split the mileage deduction.
| Period | Miles | Rate | Deduction |
|---|---|---|---|
| Jan 1 – Jun 30 | 7,500 | 72.5¢ | $5,438 |
| Jul 1 – Dec 31 | 11,500 | 76¢ | $8,740 |
| Total | 19,000 | — | $14,178 |
Step 2 — Net Schedule C profit. $164,000 − $38,000 − $14,178 = $111,822
Step 3 — SE tax base. $111,822 × 92.35% = $103,268
Step 4 — SE tax. $103,268 × 15.3% = $15,800
Step 5 — Half SE tax adjustment. $15,800 ÷ 2 = $7,900 AGI: $111,822 − $7,900 = $103,922
Step 6 — Marginal federal rate. Taxable income before QBI: $103,922 − $16,100 = $87,822. After QBI, $70,258. That’s between $50,400 and $105,700 — Devon is in the 22% bracket.
Step 7 — QBI status. Real estate agents are not an SSTB. Treas. Reg. §1.199A-5(b)(2) limits “brokerage services” to securities brokerage, not real estate. Devon is also well below the §199A income threshold, so the question is academic for him. QBI deduction: 20% × $87,822 = $17,564 (taxable-income limit binds). Taxable income: $70,258.
Step 8 — Combined cash tax savings from the mileage deduction.
| With mileage deduction | Without | |
|---|---|---|
| Net Schedule C profit | $111,822 | $126,000 |
| SE tax | $15,800 | $17,803 |
| Taxable income | $70,258 | $80,798 |
- SE tax savings: $2,003
- Income tax savings: $10,540 × 22% = $2,319
- Total cash savings: $4,322
Step 9 — Per-mile net value. $4,322 ÷ 19,000 = about 23¢ per business mile.
What the July change is worth to Devon. His post-July miles picked up 3.5¢ each: 11,500 × 3.5¢ = $403 more deduction. After SE tax ($57) and income tax at 22% ($66), that’s $123.
Notice that Devon’s per-mile value (23¢) beats Maya’s (17¢) even though they use the same rate. The bracket does that. A deduction is worth your combined marginal rate, and Devon’s is higher. This is why “the mileage deduction saves you 76¢ per mile” is wrong in a way that matters.
The blended-rate trap
The tempting shortcut: average the two rates and multiply once. Split the difference, call it 74.25¢, done.
Don’t. It’s unsanctioned, and it only produces the right answer if your driving happened to be perfectly even across July 1. Yours wasn’t.
Take 20,000 miles and flip the distribution:
| Scenario | Correct split-rate math | Naive 74.25¢ blend | Error |
|---|---|---|---|
| 4,000 miles H1 / 16,000 miles H2 | $2,900 + $12,160 = $15,060 | $14,850 | Understates by $210 |
| 16,000 miles H1 / 4,000 miles H2 | $11,600 + $3,040 = $14,640 | $14,850 | Overstates by $210 |
What happens if your log has no dates
This is where a split-rate year stops being an arithmetic exercise.
If your records don’t establish when each trip occurred, you cannot allocate miles between the two rate periods. There’s no IRS safe harbor for undated miles in a split year — the 2022 guidance didn’t address it, and neither does Announcement 2026-11.
The conservative approach, if some miles genuinely can’t be dated, is to apply the lower 72.5¢ rate to them. That’s a defensible inference, not a rule. But understand what you’re conceding: you’re admitting on the record that your log doesn’t satisfy the “time” element of §274(d). An examiner who accepts your rate concession is not obligated to accept the underlying miles.
The better answer is to date every trip. Contemporaneously. Which is a thing software does and memory does not.
Employers, reimbursement, and accountable plans
If you reimburse employees for mileage, the July 1 change hits your payroll, not your Schedule C.
Under an accountable plan (Treas. Reg. §1.62-2), reimbursement at or below the standard rate is tax-free to the employee and not reported on the W-2. Reimburse above the rate and the excess becomes taxable wages. Reimburse below it and the employee eats the difference — with no federal deduction available to recover it.
That last point is now permanent. OBBBA (P.L. 119-21) §70110 made the §67(g) suspension of miscellaneous itemized deductions permanent. Unreimbursed employee business expenses are gone federally, not just paused until 2026. The narrow above-the-line survivors: Armed Forces reservists, fee-basis state or local government officials, qualified performing artists, and certain educators. Impairment-related work expenses also survive.
Two practical notes:
- Federal law does not require you to raise your reimbursement rate to 76¢. The IRS rate is a safe harbor ceiling, not a floor.
- California is different. Labor Code §2802 makes reimbursement mandatory, and the IRS rate is the practical safe harbor under Gattuso v. Harte-Hanks Shoppers, Inc. (2007). A California employer still paying 72.5¢ for August miles is exposed.
State considerations
Federal rules don’t flow through cleanly everywhere.
California. No state mileage rate; the FTB and employers use the federal figure. Two wrinkles. First, §2802 reimbursement is mandatory, so the July 1 step-up has real payroll consequences. Second, California never conformed to §67(g), so unreimbursed employee business expenses remain deductible on the CA return. Which means California employees also have to split their miles at July 1. Gig drivers classified as contractors under Prop 22 aren’t covered by §2802 and take the federal Schedule C deduction like everyone else.
Pennsylvania. PA-40 Schedule UE allows unreimbursed employee business expenses, and the Department of Revenue follows the federal standard rate. The mid-year split flows straight through. PA disallows commuting and has its own depreciation conformity rules.
New York. Decoupled from §67(g). Employee business expenses remain claimable for state purposes on Form IT-196, so the federal two-bucket math feeds your New York itemized deduction.
New Jersey. The gross income tax base is structurally different and employee expense treatment is limited by category. Confirm with a NJ practitioner before assuming federal treatment carries over.
No-income-tax states (TX, FL, WA, NV, TN, SD, WY, AK). Only the federal Schedule C or reimbursement analysis applies.
Many state agency and municipal reimbursement policies are pegged to the federal rate and stepped up automatically on July 1. Some update on a lag. Check yours.
This happened before, and it went fine
Mid-year rate changes are rare. Before 2026, the last one was 2022, and before that, 2011.
In June 2022, Announcement 2022-13 raised the business rate from 58.5¢ to 62.5¢ effective July 1, and the medical/moving rate from 18¢ to 22¢. Charitable stayed at 14¢. The cause was the fuel price spike following Russia’s invasion of Ukraine.
Everything about the 2026 change follows the 2022 template:
- Same date-of-expense timing rule for reimbursements
- Same non-change to the depreciation component (26¢ all year in 2022) and the FAVR cap
- Same two-bucket calculation with no new form and no blended rate
- Same underlying trigger: fuel
Tax software handled 2022 by keying mileage entries to dates and splitting automatically. It will handle 2026 the same way — assuming your entries have dates to key on.
How automatic tracking solves this
A split-rate year exposes three structural problems that manual tracking has always had. It just makes them expensive instead of theoretical.
Problem one: the date is now a dollar figure. Manual logs get filled in weekly, monthly, or in April. Weekly is already reconstruction. April is a log the Tax Court throws out. When the date determines the rate, an approximate date produces an approximate deduction — and §274(d) doesn’t grade on approximation.
Problem two: the July 1 boundary sits mid-workflow. Nothing about your driving changed on July 1. Your logging has to change anyway. A driver who does 40 stops a day doesn’t notice a rate change; the software has to.
Problem three: gig platforms only count part of your driving. Your delivery app logs active miles — pickup to dropoff. It doesn’t log repositioning, waiting-zone moves, or the drive home from your last drop. Those are business miles. They’re also the ones most likely to vanish from a manual log, and now they vanish from a specific rate period too.
Here’s how EveryLastMile, an iOS mileage tracking app, handles it:
- On-device drive detection. CoreMotion and CoreLocation sensor fusion detects a drive starting and stops when you park. No button. Every trip gets a timestamp at the moment it happens, which is the definition of contemporaneous.
- Swipe classification. Business or personal, one gesture, from the notification. The business purpose field gets filled while you still remember the trip.
- Automatic July 1 segmentation. Your 2026 report splits at the rate boundary on its own. Two buckets, two rates, correct sum. You don’t do the arithmetic and you don’t get to make a mistake in it.
- §274(d)-compliant export. Date, start and end location, distance, and business purpose for every trip. All four elements. That’s the kind of contemporaneous record that survives an audit.
- Schedule C-mapped reports. Line 9 dollars and Part IV mileage totals, ready to hand to your preparer.
- iOS-native and private. Trips are processed and stored on your device. Your route history is not our business model.
The thing worth internalizing: a split-rate year doesn’t create a new requirement. Dating every trip was always the rule. It just moved the consequence of ignoring it from “audit risk someday” to “wrong number this April.”
Before you file
Two rates, one year, and a deduction that now depends on a field most people leave blank until April.
If you drove 20,000 business miles in 2026, you’re looking at roughly $15,000 in deductions and somewhere between $3,400 and $4,600 in real cash savings depending on your bracket. The July change adds $100–$150 of that. All of it rests on the same thing: a log that can prove which miles you drove, when, where, and why.
Frequently asked questions
What is the new IRS mileage rate for 2026?
There are two. Business miles driven January 1 through June 30, 2026 use 72.5¢ per mile. Business miles driven July 1 through December 31, 2026 use 76¢ per mile. Both figures come from Notice 2026-10 as modified by Announcement 2026-11.
When did the new rate take effect?
July 1, 2026. The IRS published Announcement 2026-11 in Internal Revenue Bulletin 2026-29, dated July 13, 2026, but the rate applies retroactively to miles driven from July 1 forward.
Which mileage rate do I use for a trip on June 30, 2026?
72.5¢. The rule is the date you drove, not the date you were paid or the date you file. June 30 is the last day of the first rate period.
Can I just use an average rate for the whole year?
No. There's no sanctioned blended rate. You multiply each period's miles by that period's rate and add them. An average only produces the right answer if your mileage happened to fall evenly on either side of July 1, and if it didn't, you're either understating your deduction or overstating it.
Did the charitable mileage rate change?
No. It's 14¢ and it stays 14¢. Congress set that figure in §170(i), and the IRS has no authority to adjust it administratively. It hasn't moved since 1998.
Did the medical mileage rate change?
Yes. It went from 20.5¢ to 23.5¢ on July 1, 2026, on the same schedule as the business rate. It applies to travel for medical care deducted as an itemized deduction under §213.
What if my mileage log has no dates?
You have a §274(d) problem that predates the rate change. Without dates, you can't allocate miles between the two rate periods at all. The conservative fallback is to apply 72.5¢ to undated miles, but that's an inference, not a safe harbor — and it concedes that your log fails the "time" element. Fix the log.
Does the mid-year change affect the depreciation portion of the standard rate?
No. It stays at 35¢ per mile for all of 2026, both halves. That's the amount that reduces your vehicle's basis. The IRS handled the 2022 mid-year change the same way.
Do I have to switch to actual expenses because the rate changed?
No. Rev. Proc. 2019-46 governs the method election, and Announcement 2026-11 doesn't touch it. A rate change changes the multiplier, not your eligibility or your election. If you were using standard mileage on June 30, you can use it on July 1.
What is Announcement 2026-11?
The IRS guidance document that raised the rates. It's published at 2026-29 I.R.B. 49 and modifies Notice 2026-10. Cite it as "Announcement 2026-11," not "Notice 2026-29" — 2026-29 is the Bulletin number, and at least one vendor has that wrong.
Does my employer have to raise my reimbursement to 76¢?
Federal law says no. The IRS rate is a ceiling for tax-free reimbursement under an accountable plan, not a required floor. California is the exception worth knowing: Labor Code §2802 makes reimbursement mandatory, and the IRS rate functions as the safe harbor.
I'm a W-2 employee. Can I deduct unreimbursed mileage?
Generally no. OBBBA §70110 made the §67(g) suspension permanent, so unreimbursed employee business expenses are gone federally for most people. Exceptions: Armed Forces reservists, fee-basis state or local officials, qualified performing artists, certain educators, and impairment-related work expenses. Some states (California, Pennsylvania, New York) still allow them on the state return.
Does the 2026 split affect my quarterly estimated taxes?
It can. A higher deduction for the back half of the year lowers your projected net profit, which lowers your Q3 and Q4 estimates. If you calculated your estimates in January using 72.5¢ for the full year, you're slightly overpaying. Worth a recalculation before the September 15 deadline.
What form do I use to report the split?
Schedule C. The combined deduction goes on Line 9 (Car and truck expenses), and your total business miles for the year go in Part IV. There's no separate form, attachment, or election for a split-rate year. The two-bucket math happens in your records, not on the return.
Has the IRS done a mid-year change before?
Twice recently. Announcement 2022-13 raised the business rate from 58.5¢ to 62.5¢ on July 1, 2022, and there was a similar adjustment in 2011. Both times the trigger was a fuel price spike. Both times the mechanics were identical to 2026.
This article is for educational purposes and is not tax, legal, or financial advice. Tax law is fact-specific, and rules and dollar amounts change. Verify all rates and rules against current IRS publications and a qualified tax professional (CPA or EA) before relying on them for a tax position. EveryLastMile is a mileage tracking application; it does not prepare or file tax returns.