The IRS just gave self-employed workers and businesses a little more breathing room at the pump. Starting July 1, the optional business mileage rate jumps to 76 cents per mile from 72.5 cents. That's the first midyear adjustment since 2022, when gas prices spiked after Russia invaded Ukraine.
The agency said the change "results from recent increases in the price of fuel." It's not just about gasoline, though — the rate covers all vehicle costs, including diesel, hybrid, and electric vehicles. Taxpayers can also choose to deduct actual expenses instead.
Medical and moving mileage rates also got a bump, rising to 23.5 cents from 20.5 cents. Charitable mileage stays put at 14 cents. Moving deductions are mostly limited to active-duty military and certain intelligence-community members.
So what does this mean in dollars? If you drive 10,000 qualifying business miles from July through December, you'd deduct $7,600 — that's $350 more than the first-half rate. Remember, this lowers your taxable income, not your tax bill dollar-for-dollar. And ordinary commuting doesn't count; most employees can't deduct unreimbursed work travel either.
The rate hike comes as gas prices heat up again. Regular gasoline averaged $3.95 a gallon Thursday, nearly 80 cents higher than a year ago, according to Reuters. Disruptions around the Strait of Hormuz have drained U.S. inventories to their lowest seasonal level since 2012.
GasBuddy analyst Patrick De Haan said earlier this week he expects the national average to hit $4 "in the next 7-10 days, if not sooner," as the conflict intensifies. Diesel could return to $5. Some states might cross the $4 threshold even earlier.
June brought a brief reprieve: gasoline prices fell 9.7% from May, helping annual inflation slow to 3.5%. But gas still costs 26.7% more than a year ago, leaving drivers vulnerable to another energy-driven spike.
