News & Tools

For the first time since 2022, the IRS is changing standard mileage rates in the middle of the tax year. If you track business, medical or moving miles, this matters. Starting July 1, 2026, the numbers go up, and your recordkeeping needs to get more precise.

What Changed and Why

The IRS bumped the business mileage rate from 72.5 cents to 76 cents per mile for travel on or after July 1, 2026. Medical and moving rates rose from 20.5 cents to 23.5 cents. The charitable rate stays put at 14 cents, where it has been stuck since 1998.

The trigger was fuel prices. When the IRS set the original 2026 rates back in December, gas was averaging about $2.89 per gallon nationally. By mid-July 2026, AAA reported the average had climbed to roughly $3.87, an increase of 34 percent. Much of that spike traces back to the war in Iran and uncertainty around oil production and shipping through the Strait of Hormuz.

The last time the IRS made a midyear adjustment was 2022, after Russia invaded Ukraine and gas prices surged past $5 per gallon in some markets.

Two Sets of Rates for One Year

This creates a split year for mileage calculations. Miles driven from January 1 through June 30 use the original rates. Miles driven on or after July 1 use the revised rates. If you drove 4,000 medical miles before July and another 4,000 after, you would calculate them separately: $820 for the first half at 20.5 cents, $940 for the second half at 23.5 cents.

The same logic applies to employer reimbursements. The new rates kick in only when both the expense and the reimbursement occur on or after July 1. Employers running accountable plans should review their policies to make sure they are applying the correct rate based on when the travel happened and when the payment goes out.

Why the Rates Differ by Category

The business rate is higher because it accounts for both fixed and variable costs of operating a vehicle: depreciation, insurance, maintenance, tires, gas and oil. Medical and moving rates cover only variable costs, which is why they sit lower.

The charitable rate is a different animal entirely. Congress set it by statute, and it has not budged in nearly three decades. Adjusted for inflation, 14 cents from 1998 would be closer to 29 cents today.

Who Can Actually Use These Rates

Here is where it gets narrower than many taxpayers expect. The Tax Cuts and Jobs Act eliminated the deduction for unreimbursed employee business expenses starting in 2018, and the One Big Beautiful Bill Act made that change permanent. Most employees cannot write off business mileage whether their employer reimburses them or not.

Moving expense deductions are similarly limited. Only active duty military members moving under orders for a permanent change of station qualify, along with certain intelligence community members under rules effective for 2026.

Charitable mileage requires itemizing, which means it only helps if your total deductions exceed the standard deduction of $16,100 for single filers or $32,200 for married couples filing jointly. Many taxpayers skip it.

Self-employed individuals and business owners get the most benefit from the business rate since they can still deduct qualifying mileage on Schedule C.

Recordkeeping Just Got Harder

Normally, tracking mileage means logging dates, destinations, miles driven, and business purpose. This year, you also need to note which side of July 1 the expense falls on. A mileage app can help, but a notebook or spreadsheet works, too.

If you use a vehicle exclusively for business, beginning and end-of-year odometer readings establish total mileage. Photos can serve as backup. If you mix business and personal use, your records need to clearly separate the two.

Conclusion

Gas prices forced the IRS’s hand, and now 2026 has two mileage rate regimes. The math is not complicated, but the documentation requirements are tighter than usual. Know when your miles were driven, keep clean records and make sure your employer’s reimbursement policies reflect the July 1 cutoff. The details matter this year more than most.

A county in Michigan was owed about $2,200 in back taxes. To collect it, the government took a home worth close to $200,000, auctioned it for a fraction of that, and called the matter settled. The family is now putting a simple question to the Supreme Court: when the state sells your house over a small debt, does it owe you the real worth of what it took or only whatever the auction happened to fetch?

The Rule that is Already on the Books

Three years ago, the court drew a clear line. Geraldine Tyler, then in her 90s, had let a $2,311 levy on a Minneapolis condo balloon to about $15,000 once penalties and interest stacked up. Hennepin County took the unit, found a buyer at $40,000, and held onto all of it. By any fair reckoning, the $25,000 above her debt was Tyler’s money – even though the county walked away with it. Minnesota law blessed that, as did 11 other states and the District of Columbia, plus nine more states under narrower terms.

A unanimous court ended the practice. Chief Justice Roberts wrote that a government can sell property to satisfy a tax debt but cannot help itself to more than the debt is worth. Leftover equity belongs to the owner, and a state cannot dodge that by defining the property interest away.

The Question Tyler Left Hanging

Tyler was tidy because the surplus was undeniable. Subtract a debt near $15,000 from a $40,000 sale, and the leftover is beyond dispute. The justices never had to confront the messier case where the sale price itself is artificially low. If a forced auction brings in far less than a home would fetch on the open market, is that depressed number really the measure of what the owner lost?

That is the gap, and tax auctions are where it opens. Unlike an ordinary listing, these sales draw a thin crowd of investors and speculators, and the government has little reason to chase top dollar. A county could therefore obey Tyler to the letter, hand back every cent of the auction surplus, and still watch most of a family’s equity vanish.

How the Pung Family Got Here

Three-and-a-half decades ago, Timothy Scott Pung paid $125,000 for a roughly 3,000-square-foot house in Isabella County, and for years it carried Michigan’s Principal Residence Exemption. Scott died in 2004, and his wife in 2008. Their son Marc stayed on, assuming the exemption rolled forward without any new filing. The assessor saw it otherwise and stripped the break retroactively. Marc fought back, and a state tax tribunal agreed no further paperwork had ever been required.

The assessor would not let it go. Over a shortfall of $2,241.93, on a place the county itself pegged at $194,400, the family was thrown out, and the home went under the hammer for $76,000. Nobody disputes that the estate is owed the surplus. The quarrel is how to measure it. Isabella County treats the surplus as the hammer price minus the debt, leaving about $74,000. The estate says the yardstick should be the home’s true market value minus the debt, pushing the number toward $194,400. The spread tops $100,000.

Bigger Than One House

The stakes reach far past Michigan. Minnesota alone moved more than 4,300 properties through these sales between 2014 and 2020. Across the 1,200-plus that were family homes, the typical owner lost some 92 percent of the equity above the debt, averaging around $207,000 against bills averaging just $17,000. In the nation’s capital, a veteran with dementia lost a $200,000 home over $133.88.

There is a second front, too. The estate contends the foreclosure worked as an excessive fine barred by the Eighth Amendment, a theory the lower court waved off as ordinary tax collection but one that Justices Gorsuch and Jackson have flagged for review.

Argument wrapped on Feb. 25 with a ruling likely any day now. The court has already said the government cannot keep more than it is owed. Now it must decide whether that shield covers only the cash left after the gavel, or the equity that vanished before.

Here’s something that flew under the radar for most people: a court decision from late last year could put money back in your pocket if you got hit with IRS penalties during COVID. But you need to act fast! For some taxpayers, the deadline to file a claim is July 10.

What This Case Is Actually About

Remember when COVID was declared a federal disaster? That designation wasn’t just symbolic. It triggered real protections under the tax code, specifically Section 7508A, which lets the IRS push back deadlines and waive penalties when taxpayers are caught up in a disaster. We’re talking about failure-to-file and failure-to-pay penalties here, and those fees can add up to almost 50 percent of what you already owe, which is brutal!

The Kwong v. United States decision came down from the Court of Federal Claims in November 2025, and it changed the game. The court said the nationwide COVID emergency created a mandatory postponement running from Jan. 20, 2020, through July 10, 2023. Everything that came due in that window should have been bumped to July 11, 2023. In other words, a lot of people may have been penalized when they shouldn’t have been.

This Got Real on April 30

The case had been percolating quietly until the National Taxpayer Advocate (NTA) made some noise about it on April 30. That’s when things got interesting. According to the NTA, tens of millions of taxpayers could be eligible for refunds. Not just on the penalties themselves, but on the interest that piled up on top of those penalties.

The NTA isn’t being shy about this either. The office has pushed hard for the IRS to apply relief broadly instead of making people jump through hoops. They want systemic fixes, not case-by-case battles. And they’ve asked Congress to make sure procedural red tape doesn’t rob people of money they are owed.

There’s another wrinkle worth knowing about. Some refunds issued during 2020 through 2023 may have shortchanged taxpayers on interest because the IRS treated their returns as late. If Kwong holds up, you might be able to claim that missing interest, too.

Expats Had It Especially Rough

If you were living overseas when the pandemic hit, you know the chaos was next level. Borders slammed shut with no warning. People got stranded in countries they were just passing through. Others couldn’t get back to the places they’d been living for years.

Good luck reaching your accountant when consulates are closed, mail isn’t moving, and you’re dealing with a 12-hour time zone difference. Some folks couldn’t access their bank accounts. Others couldn’t get basic documents. And plenty of people were simply stuck, unable to go anywhere, when their filing deadlines rolled around.

Slapping penalties on taxpayers who were dealing with all of that? It misses the point entirely. The disaster relief rules exist for exactly these situations. The NTA has been clear: fair treatment means recognizing what people were actually going through.

You Need to File a Protective Claim

Here’s the practical part. If you want to preserve your right to get this money back, you have to file something called a protective claim. Think of it as a placeholder that keeps your options open while the legal dust settles.

For many people, the deadline is July 10, 2026, though it depends on the tax year involved. Don’t wait until the last minute to figure this out.

The good news is the paperwork isn’t complicated. You can use IRS Form 843 or just file an amended return. You need to list the tax years you’re claiming and note that your refund depends on how the Kwong case plays out. You don’t have to calculate the exact dollar amount right now. The whole point is just to get yourself on record before time runs out.

A Few Limitations to Know About

This relief is specifically about federal income taxes under the Internal Revenue Code. If you’re worried about Report of Foreign Bank and Financial Accounts (FBAR) penalties, that’s a different animal. FBARs fall under the Bank Secrecy Act, so Kwong doesn’t automatically help there. That said, you might still have a reasonable cause argument based on the same COVID disruptions.

State taxes? Every state did its own thing. Most offered some pandemic extensions, but those programs were separate and usually more limited than what we’re talking about here.

Conclusion

If there’s any chance this applies to you, file that protective claim now. Especially if you were overseas during the pandemic years. Once that deadline passes, the door closes for good.