Due to the sustained increase in the price of fuel, the Internal Revenue Service (the “IRS”) has increased the optional standard mileage rates mid-year for computing the deductible cost of operating an automobile for business, medical, and moving expenses.
Effective July 1, 2026, the optional standard mileage rates are 76 cents per mile for business transportation, and 23.5 cents per mile for travel relating to medical and moving transportation expenses.
These increased mileage rates apply only to those expenses incurred or paid by a taxpayer on or after July 1, 2026 (and if reimbursed by an employer, reimbursed by the employer on and after that date).
Expenses incurred prior to July 1, 2026 (whether reimbursed by the employer before or after that date) are still subject to the previous 2026 rates (72.5 cents for business transportation, and 20.5 cents for medical and moving transportation). The standard mileage rate for charitable contributions remains unchanged at 14 cents per mile.
This increase in mileage rates is relevant to employers that reimburse employees for business transportation based on mileage. While there is no legal requirement that employees be reimbursed at the IRS standard rate, many employers have a policy of doing so. As a reminder, any payments to an employee based on business travel at a rate in excess of the IRS standard rate generally is taxable income to the employee.
If you have any questions regarding this latest update, please contact Mary Ellen Schill and Morgan Sweeney, the authors of this article, or any of the attorneys in the Employment & Benefits Practice Group of Ruder Ware.
The post On the Move: IRS Increases Standard Mileage Rates Mid-Year first appeared on Wisconsin Business Attorneys.