IRS raises business mileage rate to 76 cents

The IRS raised the optional standard mileage rate for business vehicle use to 76 cents per mile, the highest on record. The adjustment, effective July 1, follows rising gasoline prices nearing $4 a gallon amid tensions between the U.S. and Iran.

The agency announced the change in Announcement 2026-11, published in the latest Internal Revenue Bulletin. The new rate for business miles—up from 72.5 cents at the start of the year—applies to deductible transportation expenses incurred on or after July 1.

For medical and moving purposes, the rate increased to 23.5 cents per mile, while the charitable mileage rate stayed at 14 cents per mile, as it is fixed by law.

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The last midyear adjustment occurred in June 2022, when gas prices surged past $5 a gallon after Russia’s invasion of Ukraine.

Gas prices near $4 per gallon

The average price of regular gasoline in the U.S. reached $3.943 per gallon, according to the American Automobile Association. That marks a rise from $3.890 on July 15 and $3.846 the previous week. A month earlier, the national average hit $4.044 before dropping slightly. One year ago, the price stood at $3.160 per gallon.

The increase stems from escalating conflict between the U.S. and Iran over the Strait of Hormuz, a key route for global oil shipments.

Who benefits from the change

The revised rates apply to expenses paid or incurred after June 30, 2026. For miles driven before July 1, taxpayers must use the rates from Notice 2026-10, issued last December.

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Employers reimbursing workers for business driving must also use the new rate for payments made on or after July 1, provided the miles were driven after that date. The IRS stated that all other provisions of Notice 2026-10 remain unchanged.

Self-employed individuals and small business owners may see a slight increase in deductible expenses when filing 2026 tax returns. The impact depends on how much they drive and whether they choose the standard mileage rate over actual expense deductions.

The agency hasn’t signaled plans to revisit the rates before December. For now, taxpayers and employers should apply the new figures to qualifying miles driven after June 30.