IRS Mileage Rate Increase: 76 Cents a Mile From July 1

The IRS raised its optional standard mileage rates for miles driven on or after July 1, 2026. The business rate went from 72.5 cents to 76 cents a mile, and the medical rate from 20.5 cents to 23.5 cents. Announcement 2026-11, published in Internal Revenue Bulletin 2026-29 on July 13, 2026, says the change comes from recent increases in the price of fuel.

What changed

Use	January 1 to June 30, 2026	July 1 to December 31, 2026
Business	72.5 cents	76 cents
Medical	20.5 cents	23.5 cents
Moving, for certain active-duty military and intelligence community members	20.5 cents	23.5 cents
Charity, set by law	14 cents	14 cents

The announcement kept the rest of Notice 2026-10 in place. So two figures stay the same for all of 2026:

Depreciation portion of the business rate: 35 cents a mile. It lowers the tax basis of a vehicle you deduct at the standard rate.
Fixed and variable rate (FAVR) allowance limit: the standard vehicle cost may not exceed $61,700, trucks and vans included.

The business rate comes from a yearly study of the fixed and variable costs of running a car, and the medical rate from the variable costs only. The last mid-year change took effect July 1, 2022.

Who it affects in a NEMT company

Who	What the change means
Owners who deduct vehicles at the standard rate	Business miles from July 1, 2026 are worth 76 cents instead of 72.5
Employees you pay mileage for using their own car	You can pay up to 76 cents a mile for driving from July 1 without it counting as wages, if your plan meets the IRS rules below
Contract drivers who use their own car	They deduct their own business miles at the same rates, if they qualify
Private-pay riders and their families	Publication 502 counts amounts paid for transportation primarily for and essential to medical care, such as taxi fares, as medical expenses. Someone who drives themselves, a spouse, or a dependent to care in their own car can count 23.5 cents a mile from July 1
Medicaid mileage programs	Each program sets its own rate. Texas pays family and friends who drive riders $0.76 a mile for rides from July 1, 2026, listed as an interim rate and the same as its state employee rate

Medical costs help a rider only if they itemize, and only the part above 7.5% of adjusted gross income counts. If you run private-pay rides, give riders a receipt that shows the date and the trip so they have a record.

The IRS rate does not change what Medicaid or a broker pays you. Those rates come from your state’s fee schedule or your broker agreement. See NEMT reimbursement rates by state and, for Texas, the Medical Transportation Program mileage update.

Can your NEMT company use the standard rate

Only if your fleet and your depreciation pass a few tests. IRS Publication 463 (2025) says a “car” includes a van, pickup, or panel truck, and a car used for hire, such as a taxi, can use the standard rate. It bars the standard rate if you:

Use five or more vehicles at the same time, as in fleet operations. You then deduct actual costs for every vehicle. Vehicles used at different times do not count as used at the same time.
Claimed certain depreciation on that vehicle: a section 179 deduction, the special depreciation allowance, MACRS, or any method other than straight line over the vehicle’s useful life.
Deducted actual costs after 1997 for a vehicle you lease.

The IRS gives an example of a business with a car and four vans used at the same time: it must use actual costs for all five. A NEMT company with four vans on the road while the owner drives the company car is in the same spot.

Timing matters too. For a vehicle you own, you must choose the standard rate in the first year you use it for business, and you can switch to actual costs in a later year. For a leased vehicle, choosing the standard rate means using it for the whole lease. You make the choice by the due date of your return, including extensions.

The standard rate replaces fuel, repairs, insurance, registration, depreciation, and lease payments. You can still deduct business parking fees and tolls on top of it. If you are self-employed, you can also deduct the business share of car loan interest and of personal property tax on the vehicle.

How to figure a 2026 deduction

Split each vehicle’s log at July 1. Total the business miles for January 1 to June 30 and for July 1 to December 31. Publication 463 counts a log kept weekly as a timely record. See our mileage log.
Multiply each half by its rate. Use 72.5 cents for the first half and 76 cents for the second.
Add business parking and tolls. Keep the receipts.
Lower the vehicle’s basis. Subtract 35 cents for each 2026 business mile.

Here is one van, no section 179 deduction taken, in a company with fewer than five vehicles on the road at once:

Period	Business miles	Rate	Deduction
January 1 to June 30, 2026	11,000	72.5 cents	$7,975
July 1 to December 31, 2026	12,000	76 cents	$9,120
Total	23,000		$17,095

At 72.5 cents for the whole year, the same miles would come to $16,675, so the increase adds $420. The van’s basis drops by $8,050, which is 23,000 miles times 35 cents.

Count business miles only. Driving from one business stop to the next counts, loaded or empty. Driving between home and your regular place of work is commuting and does not count, with exceptions in Publication 463, such as when your home is your principal place of business.

Paying drivers mileage

If employees drive their own cars and you pay them per mile, Publication 463 accepts the allowance as proof of their costs when all of these apply:

You pay only for ordinary and necessary business driving.
The allowance is not more than the federal rate, such as the standard mileage rate.
The driver reports the dates, places, business purpose, and miles within a reasonable time.
The driver is not related to you. A sibling, spouse, parent or other ancestor, child or other descendant, or someone owning more than 10% of your corporation counts as related, and must also be able to prove the costs to the IRS.

Paid at or under the federal rate, the allowance stays out of box 1 of the driver’s W-2. If you pay more, the part up to the federal rate goes in box 12 with code L, and the excess is wages in box 1. The 76 cent rate applies only to allowances paid on or after July 1, 2026 for driving on or after July 1. June miles stay at 72.5 cents, even if you pay them in July.

Deciding how to classify drivers first? See 1099 or W-2 drivers.

Use it as a benchmark, not as your cost

The business rate covers the cost of running a vehicle, not the driver. Your van’s real cost per mile can be higher or lower. Work out your own number with the cost per mile calculator, then compare it with what your trips pay. Our NEMT business taxes guide covers depreciation and quarterly payments.

What to do now

Split your 2026 mileage at July 1 for every vehicle.
Update driver mileage pay if you tie it to the IRS rate, and pay June miles at 72.5 cents.
Check whether you can use the standard rate before counting on it: five vehicles at once or a section 179 deduction rules it out.
Recheck your cost per mile with fuel prices where they are now.
Figure it both ways. Publication 463 suggests working out the standard rate and actual costs to see which is larger, so ask your tax preparer before you file your 2026 return.

Key dates

Date	What happened
December 29, 2025	The IRS announces 2026 rates in IR-2025-128
January 1, 2026	72.5 cents business and 20.5 cents medical take effect
January 20, 2026	Notice 2026-10 is published in Internal Revenue Bulletin 2026-4
July 1, 2026	76 cents business and 23.5 cents medical take effect
July 13, 2026	Announcement 2026-11 is published in Internal Revenue Bulletin 2026-29
December 31, 2026	The July 1 to December 31 rate period ends