Contributed by: Henry, FreeTaxUSA Agent, Tax Pro
Have you been feeling some pain at the gas pump lately? If you use your vehicle for business or medical purposes – or for moving purposes as a member of the active-duty military or as an employee or new appointee of the intelligence community – there's some good news. Due to the rising cost of fuel, the IRS has increased the optional standard mileage rates for the second half of the year.
How do standard mileage rates affect me?
The IRS allows you to take a deduction on your tax return based on the miles you drive for business, charitable, medical, or moving purposes. One way to calculate your deductible car expenses is the standard mileage rate method, which has you multiply your mileage by a fixed rate set by the IRS. Generally, the higher the standard mileage rate, the higher the deduction you can claim.
What are the new rates?
Effective July 1, 2026, the revised standard mileage rates are:
- 76 cents per mile for business use, up from 72.5 cents
- 23.5 cents per mile for medical and moving purposes, up from 20.5 cents
💡 Note: The mileage rate for charitable contribution deductions isn't affected by this change — it's fixed by law at 14 cents per mile.
The new rates apply to mileage driven on or after July 1, 2026. Mileage from January 1 through June 30 remains at the previous 2026 rates.
How should I handle claiming the standard mileage rate on my 2026 tax return?
If you use your vehicle for qualifying business, medical or moving purposes and want to deduct the cost of operating it, you’ll need to account for both rates on your 2026 return – the lower rate for the first half of the year (January 1 – June 30) and the higher rate for the second half (July 1 – December 31). Be sure to keep a mileage log to substantiate your expenses, showing the date, purpose, and mileage for each trip. You’ll use this log to determine which standard mileage rate applies when preparing your return.
Example
Janeen is self-employed and uses her vehicle for business purposes in 2026. From January 1 to June 30, she drives 3,200 miles for business. After July 1, she drives 4,800 miles for business. Janeen wants to claim her vehicle expenses using the standard mileage rate, so she calculates her deduction as follows:
3,200 miles x 72.5 cents ($0.725) = $2,320 deduction for Jan 1-June 30
4,800 miles x 76 cents ($0.76) = $3,648 deduction for July 1-Dec 31
$2,320 + $3,648 = $5,968 total deduction for 2026
When Janeen enters her vehicle expenses in FreeTaxUSA, she’ll be prompted to enter her business mileage for Jan 1-June 30 and July 1-Dec 31 separately. FreeTaxUSA will then apply the appropriate rate for each part of the year.
The bottom line
The IRS's midyear rate increase is good news if you use your vehicle for business, medical, or qualifying moving purposes. Your 2026 deduction is really a two-part calculation — one rate for the first half of the year, and a higher rate for the second half. As long as you keep good mileage records along the way, FreeTaxUSA will walk you through applying both rates correctly, so you don't have to do the math yourself.