IRS Raises Standard Business Mileage Rate to 76 Cents Per Mile — Effective July 1, 2026

The IRS issued Announcement 2026-11 (Internal Revenue Bulletin 2026-29, dated July 13, 2026) revising the optional standard mileage rates for the second half of 2026. The new rates, effective for transportation expenses paid or incurred on or after July 1, 2026, are:

• Business use: 76 cents per mile (up from 72.5 cents for January 1–June 30, 2026)
• Medical and qualified moving purposes: 23.5 cents per mile (up from 20.5 cents)
• Charitable purposes: 14 cents per mile (unchanged — set by statute under IRC § 170(i))

The IRS stated the adjustment results from recent increases in the price of fuel. The rate applies equally to gasoline, diesel, hybrid-electric, and fully electric vehicles. The previous 72.5-cent rate remains applicable to all qualifying business mileage incurred between January 1 and June 30, 2026 — meaning 2026 tax records must reflect two distinct rate periods.

Ohio LLCs and sole proprietors who use the standard mileage method to deduct business vehicle expenses on their federal returns must apply the correct rate to each trip based on when the trip occurred, not when the expense report is submitted. A trip taken June 30 is reimbursed at 72.5 cents; a trip taken July 1 is reimbursed at 76 cents.

Motor carriers and owner-operators who reimburse drivers for business use of personal vehicles — for example, for local pick-up, fuel runs, or positioning trips — should update payroll and expense systems immediately to reflect the July 1 effective date. Reimbursements at the IRS standard rate are excluded from the employee's taxable wages only when the correct rate is applied to the correct period.

Carriers and businesses using a Fixed and Variable Rate (FAVR) reimbursement plan should review their plan terms; the maximum standard automobile cost for FAVR plans in 2026 remains $61,700. If your business has not yet reviewed its vehicle expense policy for the split-year rate, do so now — IRS rules require the applicable rate to be tied to when the expense was incurred, and records should document trip date, distance, business purpose, and the rate applied.