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Good news for taxpayers who use their vehicles for business, medical or, in certain cases, moving purposes. The Internal Revenue Service has hiked the standard per-mile tax deduction rates for these trips during the last half of 2026.
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Gasoline prices may fluctuate for the rest of 2026 depending on what happens with the U.S.-Israeli-Iran war. But at least some drivers will get a bit of tax relief from the higher (again, for now) fuel costs.
The Internal Revenue Service has increased the optional standard mileage rates for the last half of the year. These per-mile rates can be deducted by eligible taxpayers in connection with for business, medical, and moving expenses.
The new, higher rates took effect on July 1, per IRS Announcement 2026-11 that was published in the July 13 Internal Revenue Bulletin No. 2026–29.
The new rates for tax-deductible driving during July through December 2026 are —
- 76 cents per mile (cpm) for business use of a vehicle, up from the original 2026 rate of 72.5 cpm announced Dec. 29, 2026, in IRS Notice 2026-10;
- 23.5 cents per mile when a taxpayers uses a vehicle to obtain IRS-authorized medical care, up from the prior 20.5 cpm amount; and
- 23.5 cents per mile for allowable moving expenses, also up from 20.5 cpm announced late last year.
Remember, moving miles can be claimed only when they are in connection with the required relocation of some military and intelligence community personnel.
And the rate for use of a vehicle to provide charitable services remains at 14 cents per mile.
The charitable driving rate is set by Congressional statute, specifically Internal Revenue Code Sec. 170(i), and is not affected by the IRS’ annual (or more frequent) inflation-related mileage rate adjustments.
Reasons for rate changes: The IRS ordinarily updates mileage rates only once a year. However, it does make interim adjustments like this week’s reflecting increased fuel prices when data warrants.
That was the case in the summer of 2022, when fuel prices back then spiked to nearly $5 per gallon.
It’s not quite that bad this year. American Automobile Association analysis showed that the average price for regular gasoline was $2.819 a gallon on Jan. 8. AAA’s national average today, July 16, is $3.943 a gallon. That’s a 39.87 percent pump price hike since the start of 2026.
Mileage deduction choice: Taxpayers who use vehicles for allowable tax deductible purposes can use the optional standard mileage rates instead of standard mileage rates instead of calculating the actual deductible expenses.
While actual expenses might create a larger tax deduction, some filers still opt for the standard amounts because it requires less record keeping.
For example, taxpayers who use a car for business purposes can use the standard rate to claim deductible vehicle costs instead of tracking the amount of fixed expenses (such as depreciation, lease payments, and license and registration fees) and variable expenses (such as gas and oil).
Since only variable vehicle expenses are tax deductible for medical or moving purposes, the medical and moving rate is lower.
One tax year, two rates, two calculations: Whatever the reason for the tax-deductible driving, when taxpayers claim their travel on their 2026 returns next year, they’ll have to make two computations.
The deductible dollar amount for miles driven during the first have of 2026, from Jan. 1 through June 30, will be based on the first inflation-related figures from last year. Those from July 1 through Dec. 31 will be calculated using the just-increased cpm rates.
The table below shows the optional standard mileage rates for each half of 2026.
| 2026 Tax Year | Business | Medical | Moving | Charity |
| Jan. 1 – June 30 | 72.5 | 20.5 | 20.5 | 14 |
| July 1 – Dec. 31 | 76.0 | 23.5 | 23.5 | 14 |
And to answer a question I get after every mileage rate adjustment, these tax deductions are not limited to taxpayers who drive gasoline and diesel-powered vehicles.
While drivers of fully-electric and hybrid automobiles don’t have to worry at all or as much about rising fossil fuel costs, they also can claim standard mileage rates when they use those more energy-efficient and environmentally friendly vehicles for tax-allowable reasons.
Keep good road records: One thing all drivers share is the need to follow IRS rules when making mileage claims.
This mid-2026 changes to the standard option mileage deduction rates will make that a bit harder next filing season, but it still will be easier than the actual accounting route.
You can ensure the claim goes smoothly then by paying added attention now to tracking of tax-deductible driving.
Tax software should make that job easy. And even if you do the math by hand, it’s worth to save every tax penny you can.
You also might find these items of interest:
- State and city taxes add a lot to rental car costs
- Tax-free family vehicle transfers en route to Wyoming this summer
- Federal and state gas tax holidays sound good, but really wouldn’t help drivers that much
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