IRS raises gas mileage deduction amid price surge

Key Points:

• The IRS has increased the standard mileage deduction rates for business use to 76 cents per mile and for medical and moving purposes to 23.5 cents per mile, effective retroactively from July 1, 2026, due to rising fuel prices.
• This marks the first midyear adjustment to the standard mileage rates since 2022, reflecting the impact of higher gasoline costs driven by disruptions in oil supply linked to the Iran war.
• Gasoline prices have risen significantly over the past year, with the national average reaching $3.943 per gallon, a 24.7% increase from the previous year, contributing to overall inflation pressures.
• Despite a recent slight decline in gas prices, inflation remains elevated, with the Consumer Price Index (CPI) showing a 3.5% increase in June and gas prices still 26.7% higher year-over-year.
• The sustained inflation above the Federal Reserve's 2% target raises concerns about potential interest rate cuts this year, as energy costs continue to influence the broader economy.