The IRS Raised the Mileage Rate Mid-Year. Your Log Now Has Two Rates in It.

The IRS doesn’t usually change the standard mileage rate in the middle of the year. It’s happened twice this century — 2008 and 2022, both times because gas prices spiked hard enough that the original rate stopped reflecting reality. It just happened a third time.

Gas averaged around $2.89 a gallon in December 2025, when the IRS set the 2026 business rate at 72.5 cents per mile. By mid-July it was running closer to $3.87 — a 34% jump. So starting July 1, 2026, the business rate went to 76 cents per mile. Medical and moving mileage went from 20.5 to 23.5 cents. Charitable mileage, which is set by statute and not the IRS, stayed at 14 cents.

If you track business mileage with the standard rate, this isn’t a footnote — it changes the math on every mile you drove or will drive this year.

What This Means for Your Log

You now have two rates in the same tax year: 72.5 cents for miles driven January 1 through June 30, and 76 cents for miles driven July 1 through December 31. Not an average. Not a blended guess. Two separate calculations, added together.

Say you put 12,000 business miles on your vehicle in 2026 — 6,000 in the first half, 6,000 in the second.

• First half: 6,000 × $0.725 = $4,350
• Second half: 6,000 × $0.76 = $4,560
• Total deduction: $8,910

Compare that to what you’d get if you (incorrectly) applied 72.5 cents to all 12,000 miles: $8,700. That’s $210 you’d be leaving on the table for missing a rate change most business owners never hear about. Run more miles, and the gap gets bigger fast — a contractor or salesperson putting on 25,000 miles a year is looking at closer to $440 left on the table by using the wrong rate for the second half.

The reverse mistake costs you too: apply 76 cents to miles you drove in March, and you’ve overstated the deduction — which is exactly the kind of clean, easy-to-catch error an IRS notice flags.

What Actually Changed, and What Didn’t

The mileage log requirements didn’t change — you still need contemporaneous records: date, destination, business purpose, and miles for each trip. What changed is only the rate you multiply those miles by, and only for miles driven on or after July 1.

If you use an app that logs mileage automatically, check that it’s pulling the updated rate for trips from July forward — some apps update the moment the IRS publishes the change, others lag a few weeks until they push an update. I’d rather you catch a stale rate in an app than have your accountant catch it in October.

This also isn’t a reason to switch from the standard mileage rate to the actual-expense method mid-year — you generally can’t change methods on a vehicle already using standard mileage without meeting specific IRS rules. If you haven’t locked in a method yet for 2026, this post walks through how to choose between them.

Why This Happened Now

The short version: gas got more expensive, and the IRS’s job is to keep the mileage rate roughly tracking the real cost of owning and operating a vehicle — fuel, but also insurance, maintenance, and depreciation. When fuel moves 34% in six months, the rate set back in December stops doing its job. The IRS has the authority to adjust mid-year when that happens; it just rarely uses it. This is only the third time since the standard mileage rate existed in its current form.

If you’re claiming actual vehicle expenses instead of the standard rate — gas, insurance, repairs, depreciation — none of this changes anything for you directly. But it’s still a useful signal: if the IRS thinks operating costs jumped enough to move the standard rate, your actual receipts for the second half of the year should show it too.

This post is for informational purposes only and isn't a substitute for advice specific to your situation. Mileage rates and IRS guidance are subject to change; verify current rates at irs.gov. Reach Geiger Tax & Accounting at (631) 532-5622 or schedule a call for guidance specific to your business.