For the first time since 2022, the IRS has adjusted the standard mileage rates in the middle of the year. Effective July 1, 2026, the optional business rate increases to 76 cents per mile, up from 72.5 cents, and the rate for medical and moving purposes increases to 23.5 cents per mile, up from 20.5 cents. The charitable rate remains 14 cents per mile because IRC §170(i) fixes it by statute. The IRS attributed the change to the sharp rise in fuel prices during the first half of the year. Announcement 2026-11 modifies Notice 2026-10, which set the original 2026 rates last December.

The midyear change means 2026 now has two sets of rates, and mileage logs must be split at June 30. The Notice 2026-10 rates continue to apply to transportation expenses paid or incurred before July 1, while the revised rates apply to expenses paid or incurred on or after July 1. For employers reimbursing under an accountable plan, the higher rates apply only when the allowance is paid, and the underlying expense is incurred, on or after July 1. Employers should update expense-reimbursement systems now, and preparers should remind clients that a single annual rate will not work for 2026 returns.

Reality check: A client drives 10,000 business miles in 2026, with 5,000 of those miles after June 30. The full deduction on the 5,000 second-half miles is $3,800 at the new rate versus $3,625 at the old rate, worth $1,216 in tax at a 32% rate rather than $1,160. That extra $56 means the midyear bump has no place in our gas pump reality.