A Rare Midyear Increase
The IRS typically adjusts mileage rates once each year based on vehicle operating costs. However, increasing fuel prices prompted the agency to make a midyear adjustment, something that doesn’t happen often.
For the first half of 2026, the standard business mileage rate was 72.5 cents per mile. Beginning July 1, 2026, that rate increased to 76 cents per mile and will remain in effect through the end of the year.
As a result, taxpayers who use the standard mileage method will need to apply two different rates when calculating their 2026 deduction.
What This Means for Business Owners
The higher rate can provide additional tax savings for businesses and self-employed individuals who spend significant time on the road. For example, a business owner who drives 15,000 miles for business during the second half of the year will be able to deduct $11,400 using the new rate, compared to $10,875 under the previous rate.
While the increase won’t dramatically change most taxpayers’ returns, every deduction matters—especially for businesses managing rising operating costs.
Don't Overlook Recordkeeping
Even if you use the standard mileage rate instead of tracking actual vehicle expenses, documentation remains essential.
The IRS requires taxpayers to maintain records showing:
- The date of each business trip
- Miles driven
- Destination
- Business purpose
At PKS, we often find that incomplete mileage records—not tax rules—are what prevent taxpayers from claiming the full deduction they’re entitled to receive. Consistent recordkeeping throughout the year can help avoid issues at tax time and support deductions if questions ever arise.
Standard Mileage vs. Actual Expenses
Many taxpayers appreciate the simplicity of the standard mileage method, but it isn’t always the most beneficial option.
Depending on the type of vehicle you drive, how much you spend on fuel, insurance, maintenance, and other operating costs, the actual expense method may produce a larger deduction. However, certain depreciation elections and other tax provisions can affect your eligibility to use the standard mileage rate, making the choice more important than many taxpayers realize.
For individuals purchasing vehicles or placing new vehicles into service this year, comparing both methods before filing can be particularly valuable.
Other Mileage Rates Also Increased
The IRS also increased the mileage rate for qualifying medical travel and certain moving expenses from 20.5 cents per mile to 23.5 cents per mile for the remainder of 2026. The moving expense rate remains available only to certain military personnel and qualifying members of the intelligence community.
The charitable mileage rate remains unchanged at 14 cents per mile because it is set by federal law rather than adjusted annually by the IRS.
The Bottom Line
The increase in the standard mileage rate offers welcome relief for business drivers during the second half of 2026. However, choosing between the standard mileage method and actual expenses remains an important tax-planning decision.
Before year-end, consider reviewing your vehicle expenses and mileage records with your PKS advisor. A quick analysis today could help ensure you’re taking advantage of the most favorable deduction available when it’s time to file your return.
Founded in 1978, PKS & Company, P.A. is one of the region’s largest CPA and business consulting firms. Our mission is to provide high-quality accounting, tax, financial, and management consulting services. PKS is affiliated with PKS Investment Advisors LLC, a registered investment advisory firm offering comprehensive financial planning and wealth management strategies to individuals, families, and business owners.
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