IRS Increases Standard Mileage Rates for the Second Half of 2026

The IRS has announced a mid-year increase to the optional standard mileage rates for the final six months of 2026. The change, outlined in IRS Announcement 2026-11, reflects rising fuel costs and affects business mileage reimbursements beginning July 1, 2026.

If your organization reimburses employees for business travel, now is the time to review your mileage reimbursement policies and ensure they align with the updated rates.

Updated IRS Mileage Rates Effective July 1, 2026

For transportation expenses paid or incurred on or after July 1, 2026, the optional standard mileage rates are:

Business use: 76 cents per mile
Medical or moving purposes: 23.5 cents per mile
Charitable service: 14 cents per mile (unchanged)

The charitable mileage rate remains fixed by statute under Internal Revenue Code Section 170(i).

What This Means for Employers

Because the IRS made this change mid-year, employers that reimburse employees using the standard mileage rate will need to account for two different reimbursement rates during 2026.

Business travel that occurred before July 1, 2026 should be reimbursed using the rate established earlier this year, while travel on or after July 1, 2026 should use the updated rates.

Organizations using accountable reimbursement plans should update their payroll and expense reimbursement processes to ensure the correct rate is applied based on the date travel occurred.

Don’t Overlook Your Reimbursement Policies

While the updated mileage rates are optional, many employers use them as the basis for tax-free mileage reimbursements. Reviewing your policies now can help ensure compliance, reduce administrative issues, and provide employees with accurate reimbursements.

If you have questions about how these changes may affect your business or reimbursement practices, our team at MRPR can help you understand the requirements and implement the appropriate updates.

Need guidance on IRS updates or employer reimbursement policies? Contact MRPR to discuss how these changes may impact your organization.

Author

sara taylor