Will There Be a Mid-year Mileage Rate Increase? And if so, is Your Organization Ready?

Price increases. Whether they’re on groceries, on housing, or on gas, they’re nobody’s favorite. When it comes to mileage reimbursement, a year-end announcement of an increase in the IRS standard mileage rate isn’t unheard of, especially recently. Less common and less welcome are rate hikes that occur in the middle of the year to account for global, national, and economic factors impacting the costs of owning and operating a vehicle. In the last 25 years, it’s only happened four times…so far. 

Today, let’s take a look at why mid-year increases occur, and a brief history of when those mid-year rate hikes have been necessary. We’ll also discuss whether or not 2026 might end up joining the list, and how CompanyMileage can help lessen the stress, whatever comes your way. 

What Factors Cause a Rate Increase? 

Broadly, high gas prices are often cited as the biggest factor impacting adjustment of the standard mileage rate. While this isn’t totally inaccurate (see below), it’s not the whole story, either. The IRS determines the standard mileage rate every year based on national averages in the various costs of owning and operating a vehicle. 

According to a CompanyMileage study, while fuel accounted for 21.1% of the vehicle costs considered in finding the mileage rate, the biggest factor was actually depreciation, at 28.3%. The study also found that insurance accounted for 16.2% of vehicle ownership and operation costs; finance accounted for 12.5%; licenses, registration and taxes for 7.7%; and tires, repairs and maintenance for 14.3%.

A Brief History of Rate Increases

2005

The first notable mid-year adjustment of the standard mileage rate occurred in 2005. In September, the rate rose a whopping eight cents to 48.5 cents. This rate hike was caused primarily by the economic impact of August’s infamous Hurricane Katrina disaster. The hurricane caused an over 88% decrease in Gulf Coast oil production, leading to supply chain problems and massive spikes in fuel prices.  For 2006, the rate lowered 4 cents as Gulf Coast oil production began returning to pre-Katrina levels. 

2008

The IRS announced its next mid-year increase in July of 2008, when the rate rose from 50.5 cents to 58.5 cents per mile. That year, the United States experienced an economic downturn now known as the Great Recession. The recession, combined with high worldwide oil demand, led to record-high gas prices, the main catalyst for the rate hike. 

2011

The IRS announced another mid-year rate hike at the end of June 2011, upping the mileage rate 4.5 cents to 55.5 cents per gallon. The IRS cited the price of gas as a reason, which in turn reflected a spike in crude oil costs, with the global benchmark rising above $100 a barrel for the first time. The U.S. Energy Information Administration cited the Arab Spring and the Libyan Civil War, as well as increased demand, especially in China and the Middle East, as the main contributing factors. 

2022

On June 9th of 2022, the IRS announced they would raise the rate 4 cents to 62.5 cents per mile for the final six months of the year, beginning on July 1, 2022. This increase (maybe you remember) coincided with a record-breaking increase in fuel costs as average national gas prices surpassed $5/gallon for the first time. This was due mostly to a combination of seasonal demand and supply constraints caused by the COVID-19 pandemic.

What about 2026? 

Which leads us to 2026. In February of this year, the U.S. and Israel launched an attack on Iran, causing the prolonged closure of the Strait of Hormuz, a critical maritime trade choke point between the Persian Gulf and the Gulf of Oman. In that time, as of the end of May 2026, the cost of fuel increased by around 50%. On May 21, the national average was $4.54, or $1.38 higher than in May of 2025. As global demand for gas increases, both production and supply of oil continue to drop. 

We’re not the only ones noticing, either. On May 21, the National Treasury Employees Union stated in a press release that their National President, Doreen Greenwald, is urging the IRS to adjust the reimbursement rate. High fuel costs are “placing an especially hard burden on those who must drive their own vehicle to perform their official work duties,” Greenwald said in a letter to IRS CEO Frank Bisignano.

While nothing has been announced, it’s certainly not outside the realm of possibility that the current 2026 standard mileage rate of 72.5 cents per gallon may go up before the year ends. For now, we can only speculate. 

No Matter What Happens, CompanyMileage Has You Covered

Unfortunately, we can’t control natural disasters, global conflicts, or the costs of owning and operating a vehicle. And we definitely can’t control the price of gas. And presumably, neither can you. 

So at CompanyMileage, we do the next best thing. We arm our customers with our suite of automated, intuitive mileage reimbursement software. No matter what happens, the businesses we serve will always have the easiest, most efficient, and most cost-effective mileage reimbursement workflows possible. 

SureMileage, our mileage reimbursement software, uses a unique point-to-point method to automatically calculate the mileage for each work-related trip, based on the start and end points of each trip. This eschews the need for time-consuming manual logging or odometer calculations, while keeping logging errors, personal trips, and duplicated reports from ending up in expense reports. 

When trips have been submitted for review and subsequently approved, employees are reimbursed at the rate your company has decided to use, which does not necessarily need to match the IRS rate. CompanyMileage offers a free rate calculator, so that businesses that don’t want to use the IRS rate can find a rate that reflects the cost of gas in their operational radius.  

Some things might be beyond your control, but mileage reimbursement doesn’t have to be one of those things. Contact CompanyMileage today to find out more about how we help businesses reimburse efficiently, and even save money in the process.