IRS Increases Standard Mileage Rate for the Second Half of 2026

Employers who reimburse employees for business travel should be aware of an important change that took effect July 1, 2026.

The Internal Revenue Service has increased the standard mileage rate for business use of a personal vehicle from 72.5 cents per mile to 76 cents per mile for transportation expenses paid or incurred between July 1 and December 31, 2026. The previous rate remained in effect for travel that occurred between January 1 and June 30, 2026.

According to the IRS, the increase reflects recent rises in fuel costs. The standard mileage rate applies to all vehicle types, including gasoline, diesel, hybrid-electric and fully electric vehicles.

What This Means for Employers

Many employers use the IRS standard mileage rate to reimburse employees who use their personal vehicles for business purposes. Organizations that follow the federal rate should review their reimbursement policies and payroll procedures to ensure the updated rate is applied to eligible travel beginning July 1.

The business mileage rate may also be used by employers that utilize the IRS “cents-per-mile” valuation method when calculating the taxable value of personal use of certain employer-provided vehicles.

Other Mileage Rate Changes

The IRS also increased the standard mileage rate for medical and qualified moving expenses from 20.5 cents to 23.5 cents per mile effective July 1, 2026.

It’s important to note that the moving expense deduction remains limited to active-duty members of the U.S. Armed Forces who relocate under military orders due to a permanent change of station, as well as certain members of the intelligence community.

The mileage rate for charitable activities remains unchanged at 14 cents per mile.

A Reminder About Employee Tax Deductions

Employees generally cannot claim a federal tax deduction for unreimbursed business mileage. The deduction for unreimbursed employee business expenses was permanently eliminated under the One Big Beautiful Bill Act (Public Law 119-21), making employer reimbursement programs more important than ever for employees who incur business travel expenses.

If your organization reimburses mileage, now is a good time to confirm that payroll and expense reporting systems reflect the new IRS rate for travel.