Are You Tracking Mileage? New IRS Changes Make It More Valuable
Due to rising fuel prices, the Internal Revenue Service (IRS) standard mileage rate for Q3 and Q4 of 2026 has increased once again to 76 cents per mile. Although the IRS announced the change on July 13th, 2026, it is applied retroactively, taking effect as of July 1st, 2026. For the first half of the year, spanning January through June 30th, the standard mileage rate was and will remain 72.5 cents per mile.
The standard mileage rate is intended to cover the ordinary costs of operating a vehicle for business use, including:
- Gas
- Oil
- Repairs
- Maintenance
- Insurance
- Decreases in fair market value
If you reimburse employees using the IRS standard mileage rate, it is important to notify your internal HR team or payroll provider as soon as possible to reflect this change. If you are using a rate lower than the IRS standard mileage rate, no changes are required.
The increase in rate also impacts your personal taxes, not just employee reimbursement. Due to the SALT (State and Local Tax) deduction cap that increased from $10,000 to $40,000 last year under the OBBBA. The number of taxpayers who took advantage of itemizing deductions increased dramatically in 2025. This change will continue to allow a greater number of taxpayers to itemize again, as this provision is effective through 2029 and will be adjusted for inflation each year
As part of itemizing deductions, taxpayers may deduct medical expenses, including qualifying mileage, to the extent they exceed 7.5% of their adjusted gross income (AGI) for the year. Qualifying medical travel includes trips for yourself, your spouse (if filing jointly), and any dependents claimed on your tax return. This rate has increased from 21 to 23.5 cents per mile.
Some examples of qualifying trips include:
- Doctor appointments
- Dentist appointments
- Hospital visits
- Physical therapy
We encourage clients to maintain detailed mileage logs, including dates, destinations, and miles traveled, so these expenses can be properly substantiated and included if you itemize. We recommend you maintain these records even if you are unsure whether you will exceed the 7.5% threshold. This allows us to evaluate your eligibility during tax planning or when preparing your return.