IRS Mileage Rates vs. Gasoline Prices: What the 2026 Numbers Really Show
By Accounts Payable Professionals Group
Updated October 9, 2026
In April 2016, Accounts Payable Professionals Group asked a simple question: What happens when we plot IRS business mileage rates against average U.S. gasoline prices?
The original chart showed that the two move in related, but not identical, ways. Ten years later, the comparison is even more useful, especially after the IRS made a midyear adjustment in 2026.
The IRS Raised Mileage Rates Twice in 2026
The business standard mileage rate began 2026 at 72.5 cents per mile, up from 70 cents in 2025. Following increases in fuel prices, the IRS raised it again to 76 cents per mile effective July 1, 2026.
That second change matters to Accounts Payable teams processing travel and expense reimbursements.
| Mileage purpose | Jan. to June 2026 | July to Dec. 2026 |
|---|---|---|
| Business | 72.5¢ | 76¢ |
| Medical | 20.5¢ | 23.5¢ |
| Eligible moving | 20.5¢ | 23.5¢ |
| Charitable service | 14¢ | 14¢ |
The IRS said the midyear revision was prompted by recent fuel-price increases. The charitable rate is set by law and did not change. Moving-expense deductions have strict eligibility rules. Source: IRS Announcement 2026-11.
What Gasoline Prices Tell Us
The U.S. Energy Information Administration (EIA) reports that regular gasoline averaged $2.143 per gallon in 2016 and $3.097 in 2025.
For the week of October 5, 2026, the national average stood at $4.354 per gallon.
That last number is a weekly snapshot, not an annual average. It should not be treated as though it measures the same period as the 2016 and 2025 figures.
Even so, it illustrates why fuel costs are again a serious concern for employees who drive on company business.
For comparison, the IRS business mileage rate was 54 cents in 2016, 70 cents in 2025, and is now 76 cents for the second half of 2026.
The new rate is 22 cents higher than it was when APPG first published this comparison.
Why the Lines Do Not Match Perfectly
The IRS business mileage rate is not a gasoline-only allowance.
It is based on fixed and variable vehicle costs, including fuel, depreciation, insurance, tires, maintenance, and repairs.
Gasoline can change quickly. The mileage rate usually changes less often and reflects more than the price at the pump.
Consider 100 qualifying business miles in a car that averages 25 miles per gallon.
At the EIA's October 5 gasoline price, the fuel alone would cost about $17.42.
Using the second-half 2026 IRS business rate, 100 miles would calculate to $76.00.
The difference is not simply extra pay or profit. The standard mileage rate also accounts for other costs of using a personal vehicle for business.
What Accounts Payable Should Check
For companies using IRS rates as their reimbursement benchmark, the July increase creates an important expense-report control point:
- Apply the correct effective date. Distinguish business travel before July 1 from travel on or after July 1, and follow the IRS rules for mileage allowances and payment dates.
- Check the mileage record. Require the date, business purpose, trip details, and qualifying miles. Ordinary commuting should not be counted as business mileage.
- Prevent double reimbursement. Make sure employees are not claiming gasoline paid on a company card and a full personal-vehicle mileage allowance for the same miles without an appropriate policy-based adjustment.
- Coordinate AP, payroll, and policy owners. The IRS rate is an optional tax benchmark, not a universal federal requirement for every private employer to pay that exact amount. Applicable state law, company policy, and accountable-plan rules also matter.
A mileage reimbursement is only as reliable as the policy and documentation behind it.
Companies should also review how reimbursement software handles a midyear rate change, particularly if expense reports contain trips from both halves of 2026.
The Bigger Picture
APPG's 2016 chart raised a useful question, but the 2026 lesson is clearer: gasoline prices influence mileage rates without determining them dollar for dollar.
For AP professionals, the practical work is to use the correct rate, verify the business purpose, and keep reimbursements consistent and auditable.
Sources and Further Reading
Editorial Note: This article was developed with the assistance of artificial intelligence and is subject to editorial review and approval by Accounts Payable Professionals Group.
No comments:
Post a Comment