Every business trip in a personal vehicle now carries a slightly different tax value than it did earlier in the year. For eligible self-employed workers, the federal optional mileage rate is 76 cents for each business mile driven from July 1 through December 31, 2026.

The rate does not turn commuting or personal errands into deductions, and it does not remove the need for records. It is one method for calculating the deductible cost of qualified business driving.

The midyear rate applies only to the second half of 2026

The IRS’s current standard-mileage table lists 76 cents per mile for self-employed and business use from July 1 through December 31. The earlier 2026 business rate continues to govern qualified miles driven before July 1, so a year-end total may need to be split into two periods.

The change is based on when the business transportation expense occurred, not when a client paid an invoice or when the tax return is prepared. A July delivery, property visit, or trip between work locations falls in the later period. A June trip stays under the earlier rate even if the business was paid in July.

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The rate is a shortcut, not a cash payment

The mileage method converts qualified business miles into a deductible expense. For example, 1,000 eligible miles in the second half of the year would produce a $760 business expense under the standard method. That amount reduces business profit subject to tax; it is not a $760 refund and does not reduce the tax bill dollar for dollar.

The IRS formally revised the rate in Announcement 2026-11, citing recent increases in fuel prices. The announcement also set the second-half medical and qualified military-moving rate at 23.5 cents per mile, while the charitable mileage rate remains fixed by law at 14 cents. Those rates serve different purposes and cannot be substituted for the business rate.

Business miles must be separated from commuting and personal use

Driving from home to a regular workplace is generally commuting, even when a worker takes calls or thinks about the business during the trip. Business transportation can include travel between work locations, trips to meet customers, supply runs, and other ordinary and necessary driving directly connected to the trade or business. Home-office facts can affect where a business trip begins, so borderline situations deserve tax guidance.

The IRS’s business-use-of-car explanation says mixed-use vehicles require the personal and business portions to be divided. It also explains the two main methods: the standard mileage rate and actual expenses. Under the actual method, business use is applied to eligible costs such as fuel, repairs, insurance, registration, depreciation, or lease payments.

Parking fees and tolls attributable to business use may be separately deductible even when the mileage method is used. Personal parking, traffic fines, and commuting costs are different. A reliable log should capture enough detail to show which side of the line each trip belongs on.

The standard method comes with eligibility rules

A taxpayer cannot simply choose the method after seeing which number looks larger if earlier choices make the standard rate unavailable. Among the limits, the standard rate generally cannot be used for a fleet of five or more cars operated at the same time, or for a vehicle on which certain accelerated depreciation, Section 179, or special depreciation deductions were claimed.

For an owned vehicle, the standard method generally must be chosen in the first year the car is available for business use to preserve flexibility in later years. For a leased vehicle, choosing the standard method generally means continuing it for the entire lease period. Those rules can matter more than the midyear rate change when a business is deciding between mileage and actual expenses.

A defensible log records the trip when it happens

The IRS requires adequate records or sufficient evidence supporting business expenses. A mileage log should show the date, destination or route, business purpose, and business miles, along with total annual vehicle mileage. Receipts and records for tolls or parking should be retained separately. Reconstructing a full year from memory is weaker than a calendar, app, or written log updated near the time of each trip.

IRS Publication 463 explains the recordkeeping framework and the difference between standard mileage and actual car costs. It also makes clear that using the standard rate generally replaces separate deductions for items built into the rate, such as gas, maintenance, insurance, and depreciation. Claiming both the rate and the same underlying costs would double-count the expense.

The useful midyear checklist is short: separate miles before and after July 1, remove personal and commuting trips, confirm that the vehicle qualifies for the chosen method, and keep a contemporaneous log. The 76-cent rate can create a meaningful deduction, but only the business miles supported by records belong on the return.

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This article was researched and drafted with AI assistance and checked against the linked primary sources. Public records were used to verify every specific figure and deadline.