IRS Increases 2026 Mileage Rates Effective July 1
Employers and mobility teams have a mid-year adjustment to account for. This week, the IRS announced an increase to the standard mileage rates for the remainder of 2026, effective July 1.
Mid-year adjustments are uncommon. The last one occurred in 2022. The IRS typically updates mileage rates once a year, on January 1, so this change is worth flagging to payroll, finance, and mobility stakeholders now.
What's Changing
For the final six months of 2026, the standard rates are:
Business mileage: 76 cents per mile, up 3.5 cents from the rate used during the first half of the year
Final move mileage and medical travel: 23.5 cents per mile, up 3 cents from the first-half rate
Charitable mileage: unchanged at 14 cents per mile
The final move mileage rate applies to deductible moves for active-duty military members, and to certain states that continue to allow a deduction or exclusion for moving expenses.
Why the Mid-Year Change
The IRS cited recent increases in fuel prices as the primary driver behind the adjustment. Fuel is a significant input into the mileage rate calculation, but it isn't the only one. Depreciation, insurance, and other fixed and variable vehicle costs also factor into how the rate is set. A mid-year correction reflects a judgment that current rates no longer track actual driving costs closely enough to wait until January.
A Reminder on Taxability
Final move mileage, along with shipment, storage, and other final move costs, has remained taxable since January 1, 2018, with the exception of military moves and moves in certain states that have not conformed to that change. Employers relying on final move mileage reimbursements should confirm their payroll and tax treatment reflects this.
What Mobility and Payroll Teams Should Do Now
Update expense reimbursement calculations and mileage tracking tools to reflect the new rates effective July 1
Confirm any automated expense systems or third-party administrators have applied the update
Review final move mileage reimbursements for taxability, particularly for employees outside the military exception or non-conforming states
Communicate the change to employees who submit mileage-based reimbursements, so first-half and second-half trips are calculated correctly
Full details are available in Internal Revenue Bulletin 2026-29: https://www.irs.gov/irb/2026-29_irb