The IRS has made a rare midyear change to the standard mileage rate due to high fuel prices.
The IRS announced July 13 that the business standard mileage rate per mile is rising to 76 cents for the period from July 1 through Dec. 31, 2026.
That’s up from the 72.5 cents mileage rate that the agency announced at the end of last year for 2026, which has been in effect through June 30. The rate determines how much employers may reimburse employees tax-free.
The IRS also said the standard mileage rate for medical purposes will be 23.5 cents per mile, up from 20.5 cents per mile, starting July 1. The same rate of 23.5 cents per mile will apply to moving expenses for eligible active-duty Armed Forces staff and certain members of the intelligence community, also up from the 20.5 rate that applied the first half of the year.
The mileage rate for charitable mileage is fixed by statute at 14 cents per mile and has not changed.
The change comes amid fluctuating fuel prices. Gas prices have soared in recent months due to the Iran war and have been a financial stressor for employees. Gas prices dipped in recent weeks, but are inching back up amid renewed military conflicts between the U.S. and Iran. The national average price per regular gallon of gas is $3.85 as of July 14, according to AAA, a jump from the $3.79 cost a week ago.
The IRS standard mileage rate is typically set annually, but changing market conditions, such as spikes in gas prices, can widen the gap between reimbursement rates and the actual cost of business driving, requiring an off-cycle rate adjustment, said Phong Nguyen, CEO of Motus, a Boston-based mobile workforce management software firm.
“Employees who drive for work feel the effects of changing fuel prices every time they fill up their tank,” Nguyen said. “A mid-year rate adjustment recognizes the changing costs that organizations and employees are facing. Keeping reimbursement rates aligned with current operating expenses helps to ensure that employees are fairly reimbursed and that business-driving costs are accurately reflected.”
For many organizations, the updated rate may prompt a review of broader vehicle reimbursement strategies, Nguyen added. While reimbursing at the IRS standard mileage rate remains an effective solution for many organizations, vehicle costs can vary significantly based on where employees live, how much they drive, and the type of vehicle required for their role.
“The IRS mileage rate is an important benchmark, but it is not the only way organizations can approach vehicle reimbursement,” Nguyen said. “Different workforces have different needs. The most effective employee driving programs align reimbursement to how employees actually drive while balancing cost control, employee experience, and administrative simplicity.”
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