If your business reimburses employees for driving, there’s an important update you should know.
The IRS has announced new standard mileage rates that take effect July 1, 2026. Midyear changes like this don’t happen often, so it’s worth making sure your reimbursement policies and payroll processes are up to date.
New IRS Mileage Rates
Beginning July 1, 2026, the standard mileage rates are:
- Business: 76 cents per mile (up from 72.5 cents)
- Medical and moving: 23.5 cents per mile (up from 20.5 cents)
- Charitable: 14 cents per mile (no change)
The charitable mileage rate is set by law, so it remains the same.
Why This Change Matters
Many businesses use the IRS standard mileage rate to reimburse employees who drive for work. If that’s how your company handles mileage, you’ll need to update your reimbursement rate for trips taken on or after July 1, 2026.
Using the correct rate helps you stay compliant and ensures employees are reimbursed fairly.
What About Mileage Before July 1?
The previous IRS mileage rates are still valid for travel that happened before July 1, 2026.
That means:
- Mileage driven before July 1 uses the old rates.
- Mileage driven on or after July 1 uses the new rates.
This is why employers should pay close attention to when the travel occurred, not just when the reimbursement is processed.
Review Your Payroll and Expense Policies
A midyear mileage rate increase can create confusion if your expense reimbursement process isn’t updated. Now is a good time to:
- Update your mileage reimbursement policy.
- Review expense reports submitted around July 1.
- Make sure payroll and accounting teams are using the correct rates.
If you’re unsure how the new rates affect your business, talk with your tax advisor or accounting professional.
Stay Up to Date with Payroll Compliance
Keeping up with IRS changes is just one part of running payroll. At ASAP Payroll, we help businesses stay informed and simplify payroll, HR, time tracking, and compliance so you can focus on growing your business.
Want to learn how ASAP Payroll can help? Contact us today for a free consultation.
Frequently Asked Questions
When do the new IRS mileage rates take effect?
The new standard mileage rates apply to travel beginning July 1, 2026.
What is the new business mileage rate?
The business mileage reimbursement rate is 76 cents per mile for travel on or after July 1, 2026.
Did the charitable mileage rate change?
No. The charitable mileage rate remains 14 cents per mile.
Can I use the new rate for trips taken before July 1?
No. Mileage driven before July 1, 2026, should use the rates that were in effect before the change.
Why did the IRS change the mileage rate midyear?
Midyear adjustments are uncommon, but the IRS occasionally updates mileage rates when operating costs change significantly.