FOX Business correspondent Grady Trimble reports as Millions are traveling for Americas 250th birthday, setting record numbers despite increased airfare and gas prices on Varney & Co.
The IRS this week announced changes in the amount that taxpayers may deduct in gas used per mile while operating a vehicle for business for the remainder of the year amid higher gas prices.
The tax collection agency noted that the change “results from recent increases in the price of fuel” and will allow for larger mileage deductions for business, medical and moving expense purposes.
Under the revision, the standard mileage deduction rate for business will increase to 76 cents per mile, up from 72.5 cents a mile.
Deductions for medical and moving purposes will also rise to 23.5 cents per mile, rising from the previous rate of 20.5 cents.
WHITE HOUSE, GAS STATIONS POINT FINGERS OVER STUBBORN PRICES WHILE LOCATIONS THAT SLASHED PRICES SEE BOOM
Gas prices surged this spring and early summer due to the impact of the Iran war on energy markets. (Ariana Drehsler/Bloomberg via Getty Images)
The IRS’ changes to the mileage deduction are effective starting this month, retroactive to July 1, 2026.
The Journal of Accountancy noted that the IRS’ revision is the first midyear adjustment of the standard mileage rate since 2022.
Gas prices surged following the outbreak of the Iran war, which disrupted the flow of oil from the Middle East through the Strait of Hormuz and has in turn contributed to higher gasoline prices at the pump.
DOJ AND FTC PRESS STATES TO TARGET ANY ILLEGAL ACTIVITY CONTRIBUTING TO HIGH GAS PRICES
The IRS increased the mileage deduction rate for businesses, medical transport and moving expenses. (J. David Ake/Getty Images)
Data from AAA shows that the national average cost of a gallon of gasoline was $3.943 as of Thursday. That’s up from $3.16 a gallon a year ago, which represents an increase of 24.7% over the past year.
There has been some relief for drivers in recent weeks, as the average price of gas is down from $4.044 a gallon a month ago.
Gas prices have been a major factor in inflation rising this year, with the latest consumer price index (CPI) data showing gas prices are up 26.7% compared with a year ago.
BESSENT WARNS GAS STATIONS ‘WE’RE WATCHING’ AS TRUMP DEMANDS IMMEDIATE PRICE CUTS
Gas prices are up nearly 25% from a year ago, AAA data shows. (David Paul Morris/Bloomberg)
That rise is despite the CPI inflation data showing a 9.7% decline in gas prices in the month of June as energy flows through the Strait of Hormuz picked up, but further declines will be needed to offset the large increases seen in the first few months of the conflict.
Headline CPI was up 3.5% in June, well above the Federal Reserve’s target rate of 2%, which has cast doubt on the ability of the central bank to cut interest rates this year if inflation remains persistently above target.
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