IRS mileage rate increased 2026: What businesses need to do now

The Internal Revenue Service (IRS) has announced a mid-year increase to the standard business mileage rate, raising it from 72.5 cents to 76 cents per mile, effective July 1, 2026. While the adjustment reflects rising vehicle operating costs, it also serves as a reminder for businesses to review their mileage reimbursement processes and ensure they remain compliant.




The IRS also updated mileage rates for other purposes. The medical and moving expense mileage rate has increased from 20.5 cents to 23.5 cents per mile for eligible taxpayers, including active-duty Armed Forces personnel and certain members of the intelligence community. Meanwhile, the charitable mileage rate remains unchanged at 14 cents per mile, as it is fixed by statute.

For finance teams, a mileage rate change isn't just about updating a number. It requires policy revisions, employee communication, accurate reimbursement calculations, and reliable recordkeeping. Without the right systems in place, even a small rate adjustment can lead to reimbursement errors, employee dissatisfaction, and an administrative nightmare.

Why the IRS mileage rate changed

The IRS periodically reviews the standard mileage rate based on changes in the costs of operating a vehicle, including fuel, maintenance, insurance, and depreciation.

This latest increase comes amid ongoing volatility in fuel prices. Geopolitical tensions contributed to fluctuating gasoline prices, increasing travel costs for employees who use their personal vehicles for business purposes. While gas prices eased briefly in recent weeks, they have begun rising again following renewed military conflicts, adding further uncertainty for businesses managing travel expenses.
It is critical for businesses to align their reimbursement rates with IRS guidance, ensuring fair compensation for employees while maintaining consistent expense management.

Calculate your mileage rates instantly with the mileage reimbursement calculator.

Simplify mileage reimbursements with Zoho Expense

Businesses that rely on manual processes often scramble to update policies and reimbursements whenever changes occur.With Zoho Expense, employees can log business trips directly from the mobile app, while admins can configure reimbursement rates based on   organizational or regulatory requirements. Zoho Expense is compliant with IRS mileage rules, ensuring employees are reimbursed accurately and consistently.

Beyond IRS-compliant mileage tracking, Zoho Expense enables organizations to:
• Let employees book trips via the self-booking tool.
• Create policies for travel booking and expense management.
• Set General Services Administration (GSA)-compliant per-diem rules.
• Maintain digital, audit-ready records.
• Sync approved expenses with accounting software and ERP.

By eliminating manual calculations and administrative overhead, finance teams can focus on strategic work instead of processing reimbursements.