TL;DR: The IRS raised the standard mileage rate to $0.76 per mile on July 1, 2026. Keep two separate mileage logs for the first and second half of the year, and make sure your client‑facing travel fee covers the true cost of driving, which typically sits below the market‑based $1.50‑$2.50 per‑mile range.
Key takeaways
- Use $0.72 5 per mile for mileage earned January – June and $0.76 per mile for July – December when you prepare your 2026 mileage log.
- Calculate your own cost per mile (fuel, depreciation, insurance, maintenance) to set a floor for any travel surcharge.
- Most vendors bill $1.50–$2.50 per mile after a free radius; this comfortably exceeds the IRS rate and helps protect profit margins.
- Document everything in an instant quote page and secure a signed contract with an e‑signature audit trail to avoid disputes.
What the mid‑year mileage rate change means for your 2026 log
The IRS now publishes two rates for 2026: $0.72 5 per mile for the first six months and $0.76 per mile for the second six months. When you file your Schedule C or expense worksheet, you must split your total business miles accordingly.
- Separate the mileage – Record the exact number of miles driven from January 1 to June 30 and from July 1 to December 31.
- Apply the correct rate – Multiply the first‑half mileage by $0.72 5 and the second‑half mileage by $0.76.
- Add the two subtotals – The sum is the deductible amount you can claim on your tax return.
For example, if you drove 3,000 miles in the first half and 2,500 miles in the second half, the calculation would be:
- 3,000 mi × $0.72 5 = $2,175
- 2,500 mi × $0.76 = $1,900
Total deductible mileage expense: $4,075
Keeping a clean, date‑stamped log (paper or digital) simplifies this split‑year math and supports the audit trail created when a client signs the contract.
How to determine the real cost of driving for your business
The IRS mileage rate is a baseline designed to approximate the average cost of operating a vehicle for business use. Your own cost per mile will differ based on the vehicle type, fuel efficiency, and local insurance rates. A practical way to estimate your floor is to add the major expense categories:
| Expense category | Typical calculation |
|---|---|
| Fuel | (Total gallons used ÷ miles driven) × current fuel price |
| Depreciation | Purchase price ÷ expected useful life (in miles) |
| Insurance | Annual premium ÷ total annual miles |
| Maintenance & tires | Annual service estimate ÷ total annual miles |
| Registration & taxes | Annual fees ÷ total annual miles |
Add the dollar amounts from each line and divide by total miles driven to get your cost‑per‑mile figure. If that number comes out to $0.48 per mile, the IRS rate of $0.76 already provides a modest profit margin. If your cost is higher, say $0.90 per mile, you’ll need to adjust your client‑facing travel charge accordingly.
Setting a travel surcharge that protects your bottom line
Most service vendors adopt a free‑radius (often 10‑15 miles) and then charge a per‑mile fee beyond that. Industry practice commonly lands between $1.50 and $2.50 per mile. Here’s why that range makes sense:
- Covers cost floor: Even a high‑cost estimate of $0.90 per mile is well below $1.50, ensuring you never lose money on travel.
- Compensates for time: Driving time is non‑billable labor; the surcharge helps offset the opportunity cost of being on the road.
- Matches client expectations: Many clients compare vendor travel fees to ride‑share pricing, which typically falls in the $1.00‑$2.00 per‑mile band for longer trips.
When you set your travel fee, start with your calculated cost per mile, add a reasonable margin (often 50‑100 %), and then test the price against competitors in your niche. Publish the final amount on an instant quote page so prospects see the charge up front, reducing surprise and late‑payment disputes.
Communicating travel fees clearly in contracts
A transparent contract helps both parties understand when travel fees apply. Include these elements:
- Free radius definition – State the exact mileage (e.g., “first 12 miles from 123 Main St are free”).
- Per‑mile rate – List the dollar amount you will charge for each mile beyond the free radius.
- Mileage calculation method – Mention that mileage will be measured using a GPS‑based log or odometer reading at the start and end of the trip.
- Payment timing – Require the travel fee to be part of the deposit, collected via the deposit feature, so you receive cash flow before the event.
When the client signs, an e‑signature creates a timestamped record and an audit trail that can be referenced later if a dispute arises. This approach is especially useful when you need to prove that the mileage logged matches the agreed‑upon rate.
Why the IRS rate matters beyond taxes
Even though the IRS rate is primarily a tax deduction figure, it serves as a useful benchmark for pricing decisions. If you set a travel fee below $0.76 per mile, you could be subsidizing your own expenses, which hurts profitability. Conversely, charging well above the IRS rate (as most vendors do) aligns with market expectations and safeguards your net income.
FAQ
What if I only drive a few miles in the second half of the year?
Apply the $0.76 rate only to the miles you actually drove after July 1. If you drove 200 miles in that period, the deductible amount is 200 × $0.76 = $152.
Can I use the older $0.72 5 rate for the whole year to simplify record‑keeping?
The IRS requires the correct rate for each mileage period. Using the older rate for July‑December could understate your deduction and raise a red flag if audited.
Do I need to keep receipts for fuel and maintenance if I claim the mileage rate?
When you use the standard mileage rate, you do not have to keep separate receipts for fuel, depreciation, or repairs, but you should retain records that support the total business miles (logbook, GPS reports, etc.).
How often should I review my travel fee to stay competitive?
Check your cost‑per‑mile calculation annually, especially after changes in fuel prices, insurance, or vehicle depreciation. Adjust the surcharge on your quote page as needed, and update the contract language during the next renewal cycle.
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