IRS Mileage Rate 2026: Why It Split Mid-Year and How to Log It

The IRS changed the business mileage rate twice in 2026. It started the year at 72.5 cents a mile, then jumped to 76 cents on July 1. The agency has not made a mid-year change like this since 2022, when gas prices spiked hard enough that waiting until January stopped making sense.

That split matters more than a few extra cents per mile. Every trip you log from July onward earns a different rate than every trip before it. Get the split wrong on your Schedule C and you either shortchange yourself or invite a question from the IRS you don't want to answer.

1.Why the Rate Split in Half This Year

The IRS sets the mileage rate using average costs to own and run a car: gas, insurance, repairs, and how fast the car loses value. Those costs get set once, in December, for the whole next year. On July 1, 2026, the agency broke that pattern. Fuel prices climbed enough during the first half of the year that the December number stopped matching reality, so the IRS issued a second rate for the second half.

The IRS has only done this a handful of times in the last two decades: 2008, 2011, and 2022, each during a run-up in gas prices. The 2022 adjustment moved the rate from 58.5 cents to 62.5 cents mid-year, a jump close to the size freelancers are seeing now.

For freelancers, the deduction rules stay the same. Only the number you multiply changes, and it changes partway through a year you're already tracking.

2.What the Split Actually Costs You

The rate has moved every year since 2024:

Say you drive 12,000 miles total in 2026, and your trip log shows 9,000 of them were for client meetings, site visits, and supply runs. That's 75% business use, split evenly across the two rate periods: 4,500 miles from January through June, and 4,500 from July through December.

Do the math for each half separately. 4,500 miles at 72.5 cents is $3,262.50. 4,500 miles at 76 cents is $3,420. Add them and you get $6,682.50 for the year. Multiply all 9,000 miles by 76 cents instead and you'd overclaim at $6,840. Multiply all 9,000 by 72.5 cents and you'd underclaim at $6,525. Splitting the miles by the date they happened is what actually lines up with what the IRS set.

3.Standard Mileage or Actual Expenses

You don't have to use the standard mileage rate at all. The IRS gives you a second option: track your actual car costs instead, and deduct the business-use share of each one.

Option A: Standard mileage

Multiply your business miles by the rate for each period, like the math above. You don't track gas, insurance, or repairs separately. The rate already covers all of it. This method takes the least recordkeeping, as long as your mileage log itself holds up.

Option B: Actual expenses

Add up what the car actually cost you for the year: gas, insurance, repairs, registration, and depreciation. Multiply the total by your business-use percentage. On a car with high loan payments or a lot of repairs, this can beat the standard rate by a wide margin. It also takes more work, since you need a receipt for every cost, not just a mileage log.

IRS Publication 463 sets one rule that decides whether you can still pick the standard mileage rate later. Use it the first year you drive a car for business, and you can switch to actual expenses in a later year if the math changes. Use actual expenses first, and claim accelerated depreciation like Section 179 or bonus depreciation (write-offs that let you deduct a big chunk of the car's cost in year one instead of spreading it out), and you're locked into actual expenses for that car for as long as you own it.

Judge Learned Hand, a federal appeals judge whose tax opinions are still taught in law schools, wrote this in a 1947 tax dissent: "There is nothing sinister in so arranging one's affairs as to keep taxes as low as possible." The IRS built two methods into Schedule C for exactly this reason. Run the math both ways once a year and use whichever number is smaller.

4.The Log the IRS Will Actually Accept

Whichever method you pick, the deduction only survives an audit if your mileage log holds up. IRS regulation 1.274-5 spells out what counts: records created at or near the time of each trip, not rebuilt from memory when you file. Four things belong in every entry:

• The date. Not the month. The specific day you drove.
• The destination. A client name or address, not just "client meeting."
• The business purpose. One line on what you did there.
• The miles. An odometer reading or a mapping app's distance, logged the same day.

A log written the same day you drove is worth more than a perfect memory in April.

One more rule trips up more freelancers than the log itself. Driving from your house to a client's office is a commute, and commutes are never deductible, even when the client is the only reason you left the house. The trip becomes deductible once you're driving between two work locations instead, like from a home office to a client site, or from one client straight to the next.

That changes if your home office qualifies as your principal place of business, the location the IRS treats as your main place of work. Once it does, a drive from your house to a client counts as a business trip instead of a commute.

5.A System That Takes Less Than a Minute a Trip

You don't need special software to meet the IRS standard. A note on your phone works, as long as you fill it in the same day. After each trip, write the date, where you went, why, and the mileage. At the end of each month, add up the miles and multiply by whatever rate applies to that half of the year.

Mileage is one line on a longer list. The habits that cost freelancers the most in deductions are covered in the guide on expense tracking mistakes, and the same rule applies there: write it down close to the moment it happens, not months later.

If you're not sure how much this deduction is actually worth on your return, the free profit audit at simplance.org/profit-audit walks through your expenses category by category and shows where the number moves.

The rate split is a 2026 problem. Fuel prices could hold steady in 2027, and the IRS could go back to one flat number in January. The habit that gets you through this year, writing down the date, the place, the reason, and the miles before you forget any of it, is worth keeping regardless of what the rate does next.

Whatever the IRS sets for next year, freelancers who claim the full deduction will be the ones who wrote it down on the day, not the ones trying to reconstruct twelve months of driving from memory in March.