diff --git a/src/CONST.ts b/src/CONST.ts
index ed4de999c78cd..736d51be456bb 100755
--- a/src/CONST.ts
+++ b/src/CONST.ts
@@ -13,6 +13,7 @@ import type {Unit} from './types/onyx/Policy';
 type RateAndUnit = {
     unit: Unit;
     rate: number;
+    currency: string;
 };
 type CurrencyDefaultMileageRate = Record<string, RateAndUnit>;
 
@@ -2507,6 +2508,7 @@ const CONST = {
         CATEGORY: 'category',
         RECEIPT: 'receipt',
         DISTANCE: 'distance',
+        DISTANCE_RATE: 'distanceRate',
         TAG: 'tag',
         TAX_RATE: 'taxRate',
         TAX_AMOUNT: 'taxAmount',
diff --git a/src/components/ReportActionItem/MoneyRequestView.tsx b/src/components/ReportActionItem/MoneyRequestView.tsx
index 330b5dda4aac9..65ffc4848f96c 100644
--- a/src/components/ReportActionItem/MoneyRequestView.tsx
+++ b/src/components/ReportActionItem/MoneyRequestView.tsx
@@ -191,6 +191,7 @@ function MoneyRequestView({
     const isReceiptBeingScanned = hasReceipt && TransactionUtils.isReceiptBeingScanned(transaction);
     const didReceiptScanSucceed = hasReceipt && TransactionUtils.didReceiptScanSucceed(transaction);
     const canEditDistance = canUserPerformWriteAction && ReportUtils.canEditFieldOfMoneyRequest(parentReportAction, CONST.EDIT_REQUEST_FIELD.DISTANCE);
+    const canEditDistanceRate = canUserPerformWriteAction && ReportUtils.canEditFieldOfMoneyRequest(parentReportAction, CONST.EDIT_REQUEST_FIELD.DISTANCE_RATE);
 
     const isAdmin = policy?.role === 'admin';
     const isApprover = ReportUtils.isMoneyRequestReport(moneyRequestReport) && moneyRequestReport?.managerID !== null && session?.accountID === moneyRequestReport?.managerID;
@@ -225,7 +226,7 @@ function MoneyRequestView({
     let amountDescription = `${translate('iou.amount')}`;
 
     const hasRoute = TransactionUtils.hasRoute(transactionBackup ?? transaction, isDistanceRequest);
-    const rateID = transaction?.comment?.customUnit?.customUnitRateID ?? '-1';
+    const rateID = TransactionUtils.getRateID(transaction) ?? '-1';
 
     const currency = policy ? policy.outputCurrency : PolicyUtils.getPersonalPolicy()?.outputCurrency ?? CONST.CURRENCY.USD;
 
@@ -344,17 +345,16 @@ function MoneyRequestView({
                     }
                 />
             </OfflineWithFeedback>
-            {/* TODO: correct the pending field action https://github.com/Expensify/App/issues/36987 */}
-            <OfflineWithFeedback pendingAction={getPendingFieldAction('waypoints')}>
+            <OfflineWithFeedback pendingAction={getPendingFieldAction('customUnitRateID')}>
                 <MenuItemWithTopDescription
                     description={translate('common.rate')}
                     title={rateToDisplay}
-                    // TODO: https://github.com/Expensify/App/issues/36987 make it interactive and show right icon when EditRatePage is ready
-                    interactive={false}
-                    shouldShowRightIcon={false}
+                    interactive={canEditDistanceRate}
+                    shouldShowRightIcon={canEditDistanceRate}
                     titleStyle={styles.flex1}
-                    // TODO: https://github.com/Expensify/App/issues/36987 Add route for editing rate
-                    onPress={() => {}}
+                    onPress={() =>
+                        Navigation.navigate(ROUTES.MONEY_REQUEST_STEP_DISTANCE_RATE.getRoute(CONST.IOU.ACTION.EDIT, iouType, transaction?.transactionID ?? '-1', report?.reportID ?? '-1'))
+                    }
                 />
             </OfflineWithFeedback>
         </>
diff --git a/src/libs/API/types.ts b/src/libs/API/types.ts
index bc34cf32e8850..3f19c719fdd77 100644
--- a/src/libs/API/types.ts
+++ b/src/libs/API/types.ts
@@ -161,6 +161,7 @@ const WRITE_COMMANDS = {
     UPDATE_MONEY_REQUEST_TAX_AMOUNT: 'UpdateMoneyRequestTaxAmount',
     UPDATE_MONEY_REQUEST_TAX_RATE: 'UpdateMoneyRequestTaxRate',
     UPDATE_MONEY_REQUEST_DISTANCE: 'UpdateMoneyRequestDistance',
+    UPDATE_MONEY_REQUEST_DISTANCE_RATE: 'UpdateMoneyRequestDistanceRate',
     UPDATE_MONEY_REQUEST_CATEGORY: 'UpdateMoneyRequestCategory',
     UPDATE_MONEY_REQUEST_DESCRIPTION: 'UpdateMoneyRequestDescription',
     UPDATE_MONEY_REQUEST_AMOUNT_AND_CURRENCY: 'UpdateMoneyRequestAmountAndCurrency',
@@ -475,6 +476,7 @@ type WriteCommandParameters = {
     [WRITE_COMMANDS.UPDATE_MONEY_REQUEST_TAX_AMOUNT]: Parameters.UpdateMoneyRequestParams;
     [WRITE_COMMANDS.UPDATE_MONEY_REQUEST_TAX_RATE]: Parameters.UpdateMoneyRequestParams;
     [WRITE_COMMANDS.UPDATE_MONEY_REQUEST_DISTANCE]: Parameters.UpdateMoneyRequestParams;
+    [WRITE_COMMANDS.UPDATE_MONEY_REQUEST_DISTANCE_RATE]: Parameters.UpdateMoneyRequestParams;
     [WRITE_COMMANDS.UPDATE_MONEY_REQUEST_CATEGORY]: Parameters.UpdateMoneyRequestParams;
     [WRITE_COMMANDS.UPDATE_MONEY_REQUEST_DESCRIPTION]: Parameters.UpdateMoneyRequestParams;
     [WRITE_COMMANDS.HOLD_MONEY_REQUEST]: Parameters.HoldMoneyRequestParams;
diff --git a/src/libs/DistanceRequestUtils.ts b/src/libs/DistanceRequestUtils.ts
index 76d595dc69769..fa98cf32ee399 100644
--- a/src/libs/DistanceRequestUtils.ts
+++ b/src/libs/DistanceRequestUtils.ts
@@ -210,7 +210,11 @@ function getDistanceMerchant(
  * @returns The rate and unit in RateAndUnit object.
  */
 function getRateForP2P(currency: string): RateAndUnit {
-    return CONST.CURRENCY_TO_DEFAULT_MILEAGE_RATE[currency] ?? CONST.CURRENCY_TO_DEFAULT_MILEAGE_RATE.USD;
+    const currencyWithExistingRate = CONST.CURRENCY_TO_DEFAULT_MILEAGE_RATE[currency] ? currency : CONST.CURRENCY.USD;
+    return {
+        ...CONST.CURRENCY_TO_DEFAULT_MILEAGE_RATE[currencyWithExistingRate],
+        currency: currencyWithExistingRate,
+    };
 }
 
 /**
diff --git a/src/libs/Navigation/types.ts b/src/libs/Navigation/types.ts
index f4d65a16fd713..c527a02c16af9 100644
--- a/src/libs/Navigation/types.ts
+++ b/src/libs/Navigation/types.ts
@@ -891,6 +891,7 @@ type MoneyRequestNavigatorParamList = {
         currency?: string;
     };
     [SCREENS.MONEY_REQUEST.STEP_DISTANCE_RATE]: {
+        action: IOUAction;
         iouType: ValueOf<typeof CONST.IOU.TYPE>;
         transactionID: string;
         backTo: Routes;
diff --git a/src/libs/ReportUtils.ts b/src/libs/ReportUtils.ts
index 9a2c3089e6235..cf9fcf68a8006 100644
--- a/src/libs/ReportUtils.ts
+++ b/src/libs/ReportUtils.ts
@@ -362,6 +362,7 @@ type TransactionDetails = {
     currency: string;
     merchant: string;
     waypoints?: WaypointCollection | string;
+    customUnitRateID?: string;
     comment: string;
     category: string;
     billable: boolean;
@@ -2719,6 +2720,7 @@ function getTransactionDetails(transaction: OnyxInputOrEntry<Transaction>, creat
         comment: TransactionUtils.getDescription(transaction),
         merchant: TransactionUtils.getMerchant(transaction),
         waypoints: TransactionUtils.getWaypoints(transaction),
+        customUnitRateID: TransactionUtils.getRateID(transaction),
         category: TransactionUtils.getCategory(transaction),
         billable: TransactionUtils.getBillable(transaction),
         tag: TransactionUtils.getTag(transaction),
@@ -2813,6 +2815,7 @@ function canEditFieldOfMoneyRequest(reportAction: OnyxInputOrEntry<ReportAction>
         CONST.EDIT_REQUEST_FIELD.DATE,
         CONST.EDIT_REQUEST_FIELD.RECEIPT,
         CONST.EDIT_REQUEST_FIELD.DISTANCE,
+        CONST.EDIT_REQUEST_FIELD.DISTANCE_RATE,
     ];
 
     if (!ReportActionsUtils.isMoneyRequestAction(reportAction) || !canEditMoneyRequest(reportAction)) {
@@ -2852,6 +2855,11 @@ function canEditFieldOfMoneyRequest(reportAction: OnyxInputOrEntry<ReportAction>
         return !isInvoiceReport(moneyRequestReport) && !TransactionUtils.isReceiptBeingScanned(transaction) && !TransactionUtils.isDistanceRequest(transaction) && isRequestor;
     }
 
+    if (fieldToEdit === CONST.EDIT_REQUEST_FIELD.DISTANCE_RATE) {
+        // The distance rate can be modified only on the distance expense reports
+        return isExpenseReport(moneyRequestReport) && TransactionUtils.isDistanceRequest(transaction);
+    }
+
     return true;
 }
 
@@ -3291,6 +3299,19 @@ function getModifiedExpenseOriginalMessage(
         originalMessage.billable = transactionChanges?.billable ? Localize.translateLocal('common.billable').toLowerCase() : Localize.translateLocal('common.nonBillable').toLowerCase();
     }
 
+    if ('customUnitRateID' in transactionChanges) {
+        originalMessage.oldAmount = TransactionUtils.getAmount(oldTransaction, isFromExpenseReport);
+        originalMessage.oldCurrency = TransactionUtils.getCurrency(oldTransaction);
+        originalMessage.oldMerchant = TransactionUtils.getMerchant(oldTransaction);
+
+        const modifiedData = TransactionUtils.calculateAmountForUpdatedWaypointOrRate(oldTransaction, transactionChanges, policy, isFromExpenseReport);
+
+        // For the originalMessage, we should use the non-negative amount, similar to what TransactionUtils.getAmount does for oldAmount
+        originalMessage.amount = Math.abs(modifiedData.modifiedAmount);
+        originalMessage.currency = modifiedData.modifiedCurrency;
+        originalMessage.merchant = modifiedData.modifiedMerchant;
+    }
+
     return originalMessage;
 }
 
diff --git a/src/libs/TransactionUtils/getDistanceInMeters.ts b/src/libs/TransactionUtils/getDistanceInMeters.ts
index 776ae0abb8b2c..0efe72759d5d7 100644
--- a/src/libs/TransactionUtils/getDistanceInMeters.ts
+++ b/src/libs/TransactionUtils/getDistanceInMeters.ts
@@ -2,8 +2,10 @@ import DistanceRequestUtils from '@libs/DistanceRequestUtils';
 import type {OnyxInputOrEntry, Transaction} from '@src/types/onyx';
 import type {Unit} from '@src/types/onyx/Policy';
 
+// Get the distance in meters from the transaction.
+// This function is placed in a separate file to avoid circular dependencies.
 function getDistanceInMeters(transaction: OnyxInputOrEntry<Transaction>, unit: Unit | undefined) {
-    // If we are creating a new distance request, the distance is available in routes.route0.distance and it's already in meter.
+    // If we are creating a new distance request, the distance is available in routes.route0.distance and it's already in meters.
     if (transaction?.routes?.route0?.distance) {
         return transaction.routes.route0.distance;
     }
diff --git a/src/libs/TransactionUtils/index.ts b/src/libs/TransactionUtils/index.ts
index a57ff7f940d24..dd1dee99988e8 100644
--- a/src/libs/TransactionUtils/index.ts
+++ b/src/libs/TransactionUtils/index.ts
@@ -21,6 +21,10 @@ import type {Beta, OnyxInputOrEntry, Policy, RecentWaypoint, ReviewDuplicates, T
 import type {Comment, Receipt, TransactionChanges, TransactionPendingFieldsKey, Waypoint, WaypointCollection} from '@src/types/onyx/Transaction';
 import {isEmptyObject} from '@src/types/utils/EmptyObject';
 import getDistanceInMeters from './getDistanceInMeters';
+import DistanceRequestUtils from '@libs/DistanceRequestUtils';
+import * as PolicyUtils from '@libs/PolicyUtils';
+import {toLocaleDigit} from '@libs/LocaleDigitUtils';
+import type DeepValueOf from '@src/types/utils/DeepValueOf';
 
 let allTransactions: OnyxCollection<Transaction> = {};
 Onyx.connect({
@@ -41,6 +45,17 @@ Onyx.connect({
     callback: (value) => (allTransactionViolations = value),
 });
 
+let preferredLocale: DeepValueOf<typeof CONST.LOCALES> = CONST.LOCALES.DEFAULT;
+Onyx.connect({
+    key: ONYXKEYS.NVP_PREFERRED_LOCALE,
+    callback: (value) => {
+        if (!value) {
+            return;
+        }
+        preferredLocale = value;
+    },
+});
+
 let currentUserEmail = '';
 let currentUserAccountID = -1;
 Onyx.connect({
@@ -203,7 +218,7 @@ function areRequiredFieldsEmpty(transaction: OnyxEntry<Transaction>): boolean {
 }
 
 /**
- * Given the edit made to the expnse, return an updated transaction object.
+ * Given the edit made to the expense, return an updated transaction object.
  */
 function getUpdatedTransaction(transaction: Transaction, transactionChanges: TransactionChanges, isFromExpenseReport: boolean, shouldUpdateReceiptState = true): Transaction {
     // Only changing the first level fields so no need for deep clone now
@@ -240,6 +255,11 @@ function getUpdatedTransaction(transaction: Transaction, transactionChanges: Tra
         shouldStopSmartscan = true;
     }
 
+    if (Object.hasOwn(transactionChanges, 'customUnitRateID')) {
+        updatedTransaction.modifiedCustomUnitRateID = transactionChanges.customUnitRateID;
+        shouldStopSmartscan = true;
+    }
+
     if (Object.hasOwn(transactionChanges, 'taxAmount') && typeof transactionChanges.taxAmount === 'number') {
         updatedTransaction.taxAmount = isFromExpenseReport ? -transactionChanges.taxAmount : transactionChanges.taxAmount;
     }
@@ -724,6 +744,48 @@ function calculateTaxAmount(percentage: string, amount: number, currency: string
     return parseFloat(taxAmount.toFixed(decimals));
 }
 
+/**
+ * Calculates updated amount, currency, and merchant for a distance request with modified waypoints or customUnitRateID
+ */
+function calculateAmountForUpdatedWaypointOrRate(
+    transaction: OnyxInputOrEntry<Transaction>,
+    transactionChanges: TransactionChanges,
+    policy: OnyxInputOrEntry<Policy>,
+    isFromExpenseReport: boolean,
+) {
+    if (isEmptyObject(transactionChanges?.routes?.route0?.geometry) && isEmptyObject(transactionChanges.customUnitRateID)) {
+        return {
+            amount: CONST.IOU.DEFAULT_AMOUNT,
+            modifiedAmount: CONST.IOU.DEFAULT_AMOUNT,
+            modifiedMerchant: Localize.translateLocal('iou.fieldPending'),
+            modifiedCurrency: Localize.translateLocal('iou.fieldPending'),
+        };
+    }
+
+    const customUnitRateID = transactionChanges.customUnitRateID ?? getRateID(transaction) ?? '';
+    const mileageRates = DistanceRequestUtils.getMileageRates(policy, true);
+    const policyCurrency = policy?.outputCurrency ?? PolicyUtils.getPersonalPolicy()?.outputCurrency ?? CONST.CURRENCY.USD;
+    const mileageRate = isCustomUnitRateIDForP2P(transaction)
+        ? DistanceRequestUtils.getRateForP2P(policyCurrency)
+        : mileageRates?.[customUnitRateID] ?? DistanceRequestUtils.getDefaultMileageRate(policy);
+    const {unit, rate, currency} = mileageRate;
+
+    const distanceInMeters = getDistanceInMeters(transaction, unit);
+    const amount = DistanceRequestUtils.getDistanceRequestAmount(distanceInMeters, unit, rate ?? 0);
+    const updatedAmount = isFromExpenseReport ? -amount : amount;
+    const updatedCurrency = currency ?? CONST.CURRENCY.USD;
+    const updatedMerchant = DistanceRequestUtils.getDistanceMerchant(true, distanceInMeters, unit, rate, updatedCurrency, Localize.translateLocal, (digit) =>
+        toLocaleDigit(preferredLocale, digit),
+    );
+
+    return {
+        amount: updatedAmount,
+        modifiedAmount: updatedAmount,
+        modifiedMerchant: updatedMerchant,
+        modifiedCurrency: updatedCurrency,
+    };
+}
+
 /**
  * Calculates count of all tax enabled options
  */
@@ -743,10 +805,10 @@ function hasReservationList(transaction: Transaction | undefined | null): boolea
 }
 
 /**
- * Get rate ID from the transaction object
+ * Get custom unit rate (distance rate) ID from the transaction object
  */
 function getRateID(transaction: OnyxInputOrEntry<Transaction>): string | undefined {
-    return transaction?.comment?.customUnit?.customUnitRateID?.toString();
+    return transaction?.modifiedCustomUnitRateID ?? transaction?.comment?.customUnit?.customUnitRateID?.toString();
 }
 
 /**
@@ -980,6 +1042,7 @@ function buildTransactionsMergeParams(reviewDuplicates: OnyxEntry<ReviewDuplicat
 export {
     buildOptimisticTransaction,
     calculateTaxAmount,
+    calculateAmountForUpdatedWaypointOrRate,
     getWorkspaceTaxesSettingsName,
     getDefaultTaxCode,
     transformedTaxRates,
diff --git a/src/libs/actions/IOU.ts b/src/libs/actions/IOU.ts
index e63204452551c..a9a78bb929f64 100644
--- a/src/libs/actions/IOU.ts
+++ b/src/libs/actions/IOU.ts
@@ -473,10 +473,10 @@ function setCustomUnitRateID(transactionID: string, customUnitRateID: string) {
     Onyx.merge(`${ONYXKEYS.COLLECTION.TRANSACTION_DRAFT}${transactionID}`, {comment: {customUnit: {customUnitRateID}}});
 }
 
-/** Update transaction distance rate */
-function updateDistanceRequestRate(transactionID: string, rateID: string, policyID: string) {
+/** Set the distance rate of a new  transaction */
+function setMoneyRequestDistanceRate(transactionID: string, rateID: string, policyID: string, isDraft: boolean) {
     Onyx.merge(ONYXKEYS.NVP_LAST_SELECTED_DISTANCE_RATES, {[policyID]: rateID});
-    Onyx.merge(`${ONYXKEYS.COLLECTION.TRANSACTION_DRAFT}${transactionID}`, {comment: {customUnit: {customUnitRateID: rateID}}});
+    Onyx.merge(`${isDraft ? ONYXKEYS.COLLECTION.TRANSACTION_DRAFT : ONYXKEYS.COLLECTION.TRANSACTION}${transactionID}`, {comment: {customUnit: {customUnitRateID: rateID}}});
 }
 
 /** Helper function to get the receipt error for expenses, or the generic error if there's no receipt */
@@ -2481,32 +2481,6 @@ function calculateDiffAmount(
     return 0;
 }
 
-function calculateAmountForUpdatedWaypoint(
-    transaction: OnyxTypes.OnyxInputOrEntry<OnyxTypes.Transaction>,
-    transactionChanges: TransactionChanges,
-    policy: OnyxTypes.OnyxInputOrEntry<OnyxTypes.Policy>,
-    iouReport: OnyxTypes.OnyxInputOrEntry<OnyxTypes.Report>,
-) {
-    let updatedAmount: number = CONST.IOU.DEFAULT_AMOUNT;
-    let updatedMerchant = Localize.translateLocal('iou.fieldPending');
-    if (!isEmptyObject(transactionChanges?.routes?.route0?.geometry)) {
-        const customUnitRateID = TransactionUtils.getRateID(transaction) ?? '';
-        const mileageRates = DistanceRequestUtils.getMileageRates(policy, true);
-        const policyCurrency = policy?.outputCurrency ?? PolicyUtils.getPersonalPolicy()?.outputCurrency ?? CONST.CURRENCY.USD;
-        const mileageRate = TransactionUtils.isCustomUnitRateIDForP2P(transaction)
-            ? DistanceRequestUtils.getRateForP2P(policyCurrency)
-            : mileageRates?.[customUnitRateID] ?? DistanceRequestUtils.getDefaultMileageRate(policy);
-        const {unit, rate} = mileageRate;
-        const distance = TransactionUtils.getDistanceInMeters(transaction, unit);
-        const amount = DistanceRequestUtils.getDistanceRequestAmount(distance, unit, rate ?? 0);
-        updatedAmount = ReportUtils.isExpenseReport(iouReport) ? -amount : amount;
-        updatedMerchant = DistanceRequestUtils.getDistanceMerchant(true, distance, unit, rate, transaction?.currency ?? CONST.CURRENCY.USD, Localize.translateLocal, (digit) =>
-            toLocaleDigit(preferredLocale, digit),
-        );
-    }
-    return {amount: updatedAmount, modifiedAmount: updatedAmount, modifiedMerchant: updatedMerchant};
-}
-
 /**
  * @param transactionID
  * @param transactionThreadReportID
@@ -2564,10 +2538,11 @@ function getUpdateMoneyRequestParams(
     };
 
     const hasPendingWaypoints = 'waypoints' in transactionChanges;
-    if (transaction && updatedTransaction && hasPendingWaypoints) {
+    const hasModifiedDistanceRate = 'customUnitRateID' in transactionChanges;
+    if (transaction && updatedTransaction && (hasPendingWaypoints || hasModifiedDistanceRate)) {
         updatedTransaction = {
             ...updatedTransaction,
-            ...calculateAmountForUpdatedWaypoint(transaction, transactionChanges, policy, iouReport),
+            ...TransactionUtils.calculateAmountForUpdatedWaypointOrRate(transaction, transactionChanges, policy, ReportUtils.isExpenseReport(iouReport)),
         };
 
         // Delete the draft transaction when editing waypoints when the server responds successfully and there are no errors
@@ -2869,10 +2844,11 @@ function getUpdateTrackExpenseParams(
     };
 
     const hasPendingWaypoints = 'waypoints' in transactionChanges;
-    if (transaction && updatedTransaction && hasPendingWaypoints) {
+    const hasModifiedDistanceRate = 'customUnitRateID' in transactionChanges;
+    if (transaction && updatedTransaction && (hasPendingWaypoints || hasModifiedDistanceRate)) {
         updatedTransaction = {
             ...updatedTransaction,
-            ...calculateAmountForUpdatedWaypoint(transaction, transactionChanges, policy, transactionThread),
+            ...TransactionUtils.calculateAmountForUpdatedWaypointOrRate(transaction, transactionChanges, policy, ReportUtils.isExpenseReport(transactionThread)),
         };
 
         // Delete the draft transaction when editing waypoints when the server responds successfully and there are no errors
@@ -3196,6 +3172,31 @@ function updateMoneyRequestDescription(
     API.write(WRITE_COMMANDS.UPDATE_MONEY_REQUEST_DESCRIPTION, params, onyxData);
 }
 
+/** Updates the distance rate of an expense */
+function updateMoneyRequestDistanceRate(
+    transactionID: string,
+    transactionThreadReportID: string,
+    rateID: string,
+    policy: OnyxEntry<OnyxTypes.Policy>,
+    policyTagList: OnyxEntry<OnyxTypes.PolicyTagList>,
+    policyCategories: OnyxEntry<OnyxTypes.PolicyCategories>,
+) {
+    const transactionChanges: TransactionChanges = {
+        customUnitRateID: rateID,
+    };
+    const allReports = ReportConnection.getAllReports();
+    const transactionThreadReport = allReports?.[`${ONYXKEYS.COLLECTION.REPORT}${transactionThreadReportID}`] ?? null;
+
+    let data: UpdateMoneyRequestData;
+    if (ReportUtils.isTrackExpenseReport(transactionThreadReport)) {
+        data = getUpdateTrackExpenseParams(transactionID, transactionThreadReportID, transactionChanges, true, policy);
+    } else {
+        data = getUpdateMoneyRequestParams(transactionID, transactionThreadReportID, transactionChanges, policy, policyTagList, policyCategories, true);
+    }
+    const {params, onyxData} = data;
+    API.write(WRITE_COMMANDS.UPDATE_MONEY_REQUEST_DISTANCE_RATE, params, onyxData);
+}
+
 /** Edits an existing distance expense */
 function updateDistanceRequest(
     transactionID: string,
@@ -7834,6 +7835,7 @@ export {
     setMoneyRequestCreated,
     setMoneyRequestCurrency,
     setMoneyRequestDescription,
+    setMoneyRequestDistanceRate,
     setMoneyRequestMerchant,
     setMoneyRequestParticipants,
     setMoneyRequestParticipantsFromReport,
@@ -7852,13 +7854,13 @@ export {
     trackExpense,
     unapproveExpenseReport,
     unholdRequest,
-    updateDistanceRequestRate,
     updateMoneyRequestAmountAndCurrency,
     updateMoneyRequestBillable,
     updateMoneyRequestCategory,
     updateMoneyRequestDate,
     updateMoneyRequestDescription,
     updateMoneyRequestDistance,
+    updateMoneyRequestDistanceRate,
     updateMoneyRequestMerchant,
     updateMoneyRequestTag,
     updateMoneyRequestTaxAmount,
diff --git a/src/libs/migrations/TransactionBackupsToCollection.ts b/src/libs/migrations/TransactionBackupsToCollection.ts
index 53fa7e855e724..806a4a5999f56 100644
--- a/src/libs/migrations/TransactionBackupsToCollection.ts
+++ b/src/libs/migrations/TransactionBackupsToCollection.ts
@@ -7,7 +7,7 @@ import type {Transaction} from '@src/types/onyx';
 /**
  * This migration moves all the transaction backups stored in the transaction collection, ONYXKEYS.COLLECTION.TRANSACTION, to a reserved collection that only
  * stores draft transactions, ONYXKEYS.COLLECTION.TRANSACTION_DRAFT. The purpose of the migration is that there is a possibility that transaction backups are
- * not filtered by most functions, e.g, getAllReportTransactions (src/libs/TransactionUtils.ts). One problem that arose from storing transaction backups with
+ * not filtered by most functions, e.g, getAllReportTransactions (src/libs/TransactionUtils/index.ts). One problem that arose from storing transaction backups with
  * the other transactions is that for every distance expense which have their waypoints updated offline, we expect the ReportPreview component to display the
  * default image of a pending map. However, due to the presence of the transaction backup, the previous map image will be displayed alongside the pending map.
  * The problem was further discussed in this PR. https://github.com/Expensify/App/pull/30232#issuecomment-178110172
diff --git a/src/pages/iou/request/step/IOURequestStepDistanceRate.tsx b/src/pages/iou/request/step/IOURequestStepDistanceRate.tsx
index a55d491ea834a..d21edcf9518c9 100644
--- a/src/pages/iou/request/step/IOURequestStepDistanceRate.tsx
+++ b/src/pages/iou/request/step/IOURequestStepDistanceRate.tsx
@@ -17,7 +17,7 @@ import * as TransactionUtils from '@libs/TransactionUtils';
 import CONST from '@src/CONST';
 import ONYXKEYS from '@src/ONYXKEYS';
 import type SCREENS from '@src/SCREENS';
-import type {Policy, Transaction} from '@src/types/onyx';
+import type * as OnyxTypes from '@src/types/onyx';
 import type {Unit} from '@src/types/onyx/Policy';
 import StepScreenWrapper from './StepScreenWrapper';
 import withFullTransactionOrNotFound from './withFullTransactionOrNotFound';
@@ -26,7 +26,13 @@ import withWritableReportOrNotFound from './withWritableReportOrNotFound';
 
 type IOURequestStepDistanceRateOnyxProps = {
     /** Policy details */
-    policy: OnyxEntry<Policy>;
+    policy: OnyxEntry<OnyxTypes.Policy>;
+
+    /** Collection of categories attached to the policy */
+    policyCategories: OnyxEntry<OnyxTypes.PolicyCategories>;
+
+    /** Collection of tags attached to the policy */
+    policyTags: OnyxEntry<OnyxTypes.PolicyTagList>;
 
     /** Mileage rates */
     rates: Record<string, MileageRate>;
@@ -35,25 +41,28 @@ type IOURequestStepDistanceRateOnyxProps = {
 type IOURequestStepDistanceRateProps = IOURequestStepDistanceRateOnyxProps &
     WithWritableReportOrNotFoundProps<typeof SCREENS.MONEY_REQUEST.STEP_DISTANCE_RATE> & {
         /** Holds data related to Money Request view state, rather than the underlying Money Request data. */
-        transaction: OnyxEntry<Transaction>;
+        transaction: OnyxEntry<OnyxTypes.Transaction>;
     };
 
 function IOURequestStepDistanceRate({
     policy,
     report,
     route: {
-        params: {backTo, transactionID},
+        params: {action, reportID, backTo, transactionID},
     },
     transaction,
     rates,
+    policyTags,
+    policyCategories,
 }: IOURequestStepDistanceRateProps) {
     const styles = useThemeStyles();
     const {translate, toLocaleDigit} = useLocalize();
     const isDistanceRequest = TransactionUtils.isDistanceRequest(transaction);
     const isPolicyExpenseChat = ReportUtils.isReportInGroupPolicy(report);
     const shouldShowTax = isTaxTrackingEnabled(isPolicyExpenseChat, policy, isDistanceRequest);
+    const isEditing = action === CONST.IOU.ACTION.EDIT;
 
-    const lastSelectedRateID = TransactionUtils.getRateID(transaction) ?? '-1';
+    const currentRateID = TransactionUtils.getRateID(transaction) ?? '-1';
 
     const navigateBack = () => {
         Navigation.goBack(backTo);
@@ -67,7 +76,7 @@ function IOURequestStepDistanceRate({
             alternateText: rate.name ? rateForDisplay : '',
             keyForList: rate.customUnitRateID,
             value: rate.customUnitRateID,
-            isSelected: lastSelectedRateID ? lastSelectedRateID === rate.customUnitRateID : !!(rate.name === CONST.CUSTOM_UNITS.DEFAULT_RATE),
+            isSelected: currentRateID ? currentRateID === rate.customUnitRateID : rate.name === CONST.CUSTOM_UNITS.DEFAULT_RATE,
         };
     });
 
@@ -85,7 +94,15 @@ function IOURequestStepDistanceRate({
             IOU.setMoneyRequestTaxAmount(transactionID, taxAmount);
             IOU.setMoneyRequestTaxRate(transactionID, taxRateExternalID);
         }
-        IOU.updateDistanceRequestRate(transactionID, customUnitRateID, policy?.id ?? '-1');
+
+        if (currentRateID !== customUnitRateID) {
+            IOU.setMoneyRequestDistanceRate(transactionID, customUnitRateID, policy?.id ?? '-1', !isEditing);
+
+            if (isEditing) {
+                IOU.updateMoneyRequestDistanceRate(transaction?.transactionID ?? '-1', reportID, customUnitRateID, policy, policyTags, policyCategories);
+            }
+        }
+
         navigateBack();
     }
 
@@ -93,8 +110,8 @@ function IOURequestStepDistanceRate({
         <StepScreenWrapper
             headerTitle={translate('common.rate')}
             onBackButtonPress={navigateBack}
-            shouldShowWrapper={!!backTo}
-            testID="rate"
+            shouldShowWrapper
+            testID={IOURequestStepDistanceRate.displayName}
         >
             <Text style={[styles.mh5, styles.mv4]}>{translate('iou.chooseARate', {unit})}</Text>
 
@@ -115,9 +132,15 @@ const IOURequestStepDistanceRateWithOnyx = withOnyx<IOURequestStepDistanceRatePr
     policy: {
         key: ({report}) => `${ONYXKEYS.COLLECTION.POLICY}${report ? report.policyID : '-1'}`,
     },
+    policyCategories: {
+        key: ({report}) => `${ONYXKEYS.COLLECTION.POLICY_CATEGORIES}${report ? report.policyID : '0'}`,
+    },
+    policyTags: {
+        key: ({report}) => `${ONYXKEYS.COLLECTION.POLICY_TAGS}${report ? report.policyID : '0'}`,
+    },
     rates: {
         key: ({report}) => `${ONYXKEYS.COLLECTION.POLICY}${report?.policyID ?? '-1'}`,
-        selector: (policy: OnyxEntry<Policy>) => DistanceRequestUtils.getMileageRates(policy),
+        selector: (policy: OnyxEntry<OnyxTypes.Policy>) => DistanceRequestUtils.getMileageRates(policy),
     },
 })(IOURequestStepDistanceRate);
 
diff --git a/src/types/onyx/Transaction.ts b/src/types/onyx/Transaction.ts
index 7515e2f5a8d05..607b9b808b858 100644
--- a/src/types/onyx/Transaction.ts
+++ b/src/types/onyx/Transaction.ts
@@ -354,6 +354,9 @@ type Transaction = OnyxCommon.OnyxValueWithOfflineFeedback<
         /** The edited waypoints for the distance expense */
         modifiedWaypoints?: WaypointCollection;
 
+        /** The edited distance rate for the distance request */
+        modifiedCustomUnitRateID?: string;
+
         /**
          * Used during the creation flow before the transaction is saved to the server and helps dictate where
          * the user is navigated to when pressing the back button on the confirmation step
@@ -446,7 +449,7 @@ type Transaction = OnyxCommon.OnyxValueWithOfflineFeedback<
         /** Whether the transaction is linked to a managed card */
         managedCard?: boolean;
     },
-    keyof Comment
+    keyof Comment | keyof TransactionCustomUnit
 >;
 
 /** Keys of pending transaction fields */
@@ -460,6 +463,9 @@ type AdditionalTransactionChanges = {
     /** Collection of modified waypoints */
     waypoints?: WaypointCollection;
 
+    /** The ID of the distance rate */
+    customUnitRateID?: string;
+
     /** Previous amount before changes */
     oldAmount?: number;