Business Mileage Rate Changed. Is Your Business Ready?

If your business tracks mileage, reimburses employees for business travel, or uses the IRS standard mileage method, there is an important update you shouldn't wait until year-end to address.

The IRS recently announced a mid-year increase to the business mileage rate. Effective July 1, 2026, the standard business mileage rate increased from 72.5 cents per mile to 76 cents per mile because of rising fuel costs. Unlike most years, this change happened in the middle of the calendar year, which means you'll need to track mileage differently for the remainder of 2026.

The good news is this doesn't have to be complicated. A few small changes now can make payroll reimbursements, bookkeeping, and tax preparation much easier when the year comes to a close.

What Changed to the Business Mileage Rate?

For 2026, there are now two standard business mileage rates:

• January 1 through June 30: 72.5¢ per mile

• July 1 through December 31: 76¢ per mile

  
  

The biggest takeaway isn't the increase itself. It's that the date the miles were driven now matters.

If you use one total mileage number for the year, you may not have the information needed when it's time to calculate reimbursements or prepare your tax return.

Instead, make sure your mileage log clearly shows when each business trip occurred.

What This Means for Your Business

If your business reimburses employees for mileage, now is the time to review your reimbursement process.

Employee mileage driven on or after July 1 should be reimbursed using the updated IRS rate. If your business has an accountable reimbursement plan, it should also be updated to reflect the new rate.

For business owners who use the standard mileage method, you'll also need to separate mileage driven before July 1 from mileage driven after July 1 when it's time to prepare your tax return.

Keeping those records organized now will save time and help avoid unnecessary questions later.

Good Mileage Tracking Is More Important Than Ever

This IRS update is a great reminder to take a look at how your business is tracking mileage.

Whether you use a mileage tracking app, QuickBooks, a spreadsheet, or a handwritten mileage log, consistency is what matters most.

Your records should include:

• The date of each business trip

• Where you traveled

• The business purpose of the trip

• Total business miles driven

  
  

These details not only support your deduction or reimbursement, but they also make year-end reporting much easier.

Don't Let a Small Change Create a Bigger Headache

A mid-year change like this is uncommon, but it doesn't have to create extra work.

Taking a few minutes now to update your reimbursement rate and review how mileage is being tracked can save time when payroll is processed and when tax season arrives.

The sooner your records reflect the updated business mileage rate, the easier it will be to prepare accurate financial records at the end of the year.

Have Questions? We're Happy to Help.

Every business is different, and this update may affect your bookkeeping, payroll process, or year-end tax preparation in different ways.

If you're unsure how the updated business mileage rate applies to your business, it's always a good idea to discuss your specific situation with your accountant or tax professional.

If you're already a Perfectly Balanced client, we're happy to help you understand what this change means for your business.

If you're looking for an accounting partner to help with bookkeeping, payroll, tax planning, and year-round business support, we'd love to start the conversation.

This article is intended for general informational purposes only and should not be considered tax or legal advice. Please consult your accountant or tax professional regarding your specific situation before making financial or tax-related decisions.