The 2026 IRS Mileage Rate Changed Mid-Year: 72.5¢ Then 76¢
2026-09-18
Short answer: For 2026 there are two business rates, not one: 72.5¢ per mile for miles driven 1 January–30 June, and 76¢ per mile from 1 July onward. A log that does not separate the two halves of the year cannot be converted into a correct deduction or reimbursement.
What changed, and when
The IRS sets the business standard mileage rate once a year from a study of the fixed and variable costs of running a car. For 2026 it announced 72.5 cents per mile, up 2.5 cents on 2025. Then it did something it rarely does: it raised the rate again part-way through the year, to 76 cents per mile effective 1 July 2026.
That leaves 2026 with two business rates in one tax year:
| Miles driven | Business rate |
|---|---|
| 1 January – 30 June 2026 | 72.5¢ per mile |
| 1 July – 31 December 2026 | 76¢ per mile |
The rate that applies is set by the date the miles were driven, not the date you submitted the claim, not the date you were paid, and not the date you file. A mileage log that records only a yearly total cannot be converted into a correct figure, because the information needed to split it has already been thrown away.
The arithmetic
deductible amount = (miles 1 Jan–30 Jun × 0.725) + (miles 1 Jul–31 Dec × 0.76)Worked example. A contractor drives 11,400 business miles in 2026: 5,200 before 1 July and 6,200 after.
- First half: 5,200 ×
0.725 = **3,770.00** - Second half: 6,200 ×
0.76 = **4,712.00** - Total: $8,482.00
Applying 72.5 cents to all 11,400 miles gives 8,265 — 217 too low. Applying 76 cents to all of them gives 8,664 — 182 too high. Neither shortcut is close enough to ignore, and one of them is wrong in the direction that gets corrected by someone else.
What this changes about a driving decision
The standard rate is the closest thing to an official, updated answer to “what does a mile actually cost?” — which is why it is useful well beyond tax. Two consequences follow from the 2026 increase.
A commute is more expensive than last year’s arithmetic said. If you were comparing a job, a move or a return-to-office mandate using a 2025 figure, the driving side of that comparison is now understated. At 76 cents, a 24-mile round-trip commute run 230 days a year is $4,195 in vehicle cost alone, before parking, tolls or the value of the time.
Reimbursement that lags the rate quietly becomes a pay cut. An employer still paying 70 cents is under-reimbursing by 6 cents a mile in the second half of 2026. For someone driving 800 business miles a month that is $48 a month of cost quietly moved onto the employee.
What would reverse the conclusion
The standard rate is an average across the national vehicle fleet. It is not a measurement of your car, and three things move a real cost per mile a long way from it:
- A paid-off, high-mileage, fuel-efficient car usually costs less per mile than the standard rate, because the largest components of the allowance — depreciation and insurance on a newer vehicle — are smaller or already spent.
- A new or financed vehicle frequently costs more, because depreciation in the first years is steeper than the average the rate is built on.
- Very low annual mileage raises cost per mile sharply, since insurance, registration and financing are fixed whether you drive 3,000 miles or 15,000.
If you want the real number rather than the allowance, divide your own twelve-month total of fuel, insurance, registration, maintenance, tyres, financing and depreciation by the miles you actually drove.
Run your own numbers in the cost per mile calculator →