IRS Increases Business Mileage Rate to 76 Cents for Second Half of 2026
The Internal Revenue Service has announced a midyear increase in the optional standard mileage rate for business use of an automobile, providing a higher rate for the second half of 2026. As reported by the Journal of Accountancy, IRS Announcement 2026-11 modifies Notice 2026-10 to raise the deductible business rate to 76 cents per mile for trips taken between July 1 and December 31, 2026. This reflects a 3.5-cent increase over the 72.5-cent rate that was in effect during the first six months of the year.
The unusual midyear adjustment comes in response to significant increases in fuel costs across the country. According to data cited in the report from the American Automobile Association, average regular gasoline prices rose from $2.819 per gallon on January 8 to $3.890 per gallon on July 15, marking an increase of roughly 38 percent. The IRS last implemented a midyear adjustment to standard mileage rates in 2022 during another period of rapid fuel price inflation.
For residential real estate investors, short-term rental hosts, and long-term property managers, this rate change directly affects how motor vehicle expenses are calculated on annual tax returns when using the standard mileage method. Rental property owners frequently drive to manage properties, inspect units, perform maintenance, handle tenant turnovers, collect keys, or purchase supplies. Trips taken for property management purposes on or after July 1, 2026, can be deducted at the higher 76-cent rate, while trips completed through June 30, 2026, remain subject to the initial 72.5-cent rate.
Because the rate changed midway through the year, property operators will need to split their 2026 mileage tracking into two distinct periods to ensure accurate records for tax preparation. Precise documentation showing the date, business purpose, destination, and exact mileage of each trip will be essential when calculating deductible travel expenses. STR and LTR operators can use HostHours to capture ongoing property work and retain detailed activity logs, helping ensure calendar records and evidence are organized in a clear export packet for CPA review.
While the higher standard mileage rate increases potential write-offs for active real estate operators, property owners should remember that vehicle expense deductions require strict adherence to contemporaneous logging rules. Taxpayers who choose the actual expense method instead of the optional standard mileage rate are not affected by this rate increase and must continue tracking actual gas, maintenance, depreciation, and repair costs. Property owners should consult a qualified CPA or tax professional to determine the appropriate mileage calculation for their specific operational setup and portfolio structure.
Source: Journal of Accountancy
