The IRS has raised the business standard mileage rate to 76 cents per mile, effective July 1, 2026, up from 72.5 cents for the first half of the year. For service vendors who charge travel fees, this midyear change means you'll need to apply each rate to the miles driven in its respective half when tracking your 2026 mileage log.
Key takeaways
- The IRS business standard mileage rate has increased to 76 cents per mile for the second half of 2026
- Vendors should track mileage separately for each half of the year to apply the correct rate
- Travel fees should at least cover the real cost of driving, which is now at least 76 cents per mile for the second half of the year
- Typical market travel rates range from $1.50 to $2.50 per mile beyond a free radius
Understanding The Midyear Change
The midyear change in the business standard mileage rate means that for a 2026 mileage log, you'll need to calculate your deductible miles using 72.5 cents per mile for miles driven from January 1 through June 30, and 76 cents per mile for miles driven from July 1 through December 31. This change may affect how you track and record your mileage, especially if you're using a mileage log or other tracking method. You can find more information on tracking mileage and calculating deductions on the IRS website.
Setting Your Per Mile Travel Fee
When setting your per mile travel fee, it's essential to consider the real cost of driving, which includes not just fuel, but also maintenance, insurance, and depreciation. With the new rate of 76 cents per mile, you should ensure that your travel fee at least clears this cost floor. If you're charging a flat travel fee, you may want to review and adjust it to ensure you're covering your costs. For example, if you drive a lot for your business, you may want to consider increasing your travel fee to $1.00 or $1.25 per mile to account for the increased costs.
Market Travel Rates
Typical market travel rates for service vendors range from $1.50 to $2.50 per mile beyond a free radius, which often includes a certain number of miles from the vendor's location. These rates are usually higher than the IRS business standard mileage rate because they need to cover not just the cost of driving, but also other expenses such as parking, tolls, and equipment. If you're charging a travel fee, it's essential to research what other vendors in your area are charging to ensure you're competitive. You can also consider offering different tiers of service or packages that include travel fees to attract more clients. For example, you could offer a "local" package that includes a free radius of 25 miles, and then charge $1.50 per mile beyond that.
Best Practices For Tracking Mileage
To ensure you're accurately tracking your mileage and applying the correct rate, consider the following best practices:
- Use a mileage log or tracking app to record your miles driven
- Separate your mileage log into two sections: one for January 1 through June 30, and one for July 1 through December 31
- Apply the correct mileage rate to each section: 72.5 cents per mile for the first half, and 76 cents per mile for the second half
- Review and adjust your travel fee regularly to ensure you're covering your costs
FAQ
What is the new business standard mileage rate, and when does it go into effect? The new business standard mileage rate is 76 cents per mile, effective July 1, 2026. How do I track my mileage to apply the correct rate? You can use a mileage log or tracking app to record your miles driven, and separate your log into two sections: one for January 1 through June 30, and one for July 1 through December 31. What should I consider when setting my per mile travel fee? You should consider the real cost of driving, including fuel, maintenance, insurance, and depreciation, as well as what other vendors in your area are charging. Where can I find more information on the business standard mileage rate and tracking mileage? You can find more information on the IRS website, or by consulting with a tax professional.
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