Donna Genie explains why the IRS raises the standard mileage rate mid-year: to cover rising costs of gas, maintenance, insurance, and depreciation. If you drove 10,000 business miles in the second half of the year, the increase nets you an extra $350 deduction. Most small-business owners don't track mileage at all, so they miss it.
Because the standard mileage rate is supposed to represent the actual cost of operating a vehicle for business purposes. That includes gas, maintenance, insurance, depreciation—all of it. When those costs go up mid-year in a meaningful way, the IRS adjusts the rate to keep it aligned with what it actually costs to operate a vehicle. This isn't the government being generous here; this is government acknowledging that the The costs are more to operate a business vehicle in July than it was in January, and the deduction needs to reflect that reality. But here's the thing most people miss: the rate increase doesn't matter if you're not tracking mileage in the first place. And that's where the vast majority of small business owners are leaving massive money on the table. So let's talk real numbers here, not just cents per mile. If you drive 10,000 business miles in the second half of the year, the rate increase alone gives you an extra $350 in deductions. Now that's 10,000 miles times 3.5 cents. So not life-changing, but not nothing either. But here's the bigger issue. Most small businesses aren't tracking the 10,000 miles. They're not tracking anything consistently. They're guessing at year-end, or they're ignoring the deduction completely because they assume it's too complicated
