IRS Boosting Mileage Deduction Rates as Gas Prices Soar

The Internal Revenue Service announced an increase in the optional standard mileage rate for the final six months of 2022. Taxpayers may use the optional standard mileage rates to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes.

For the final six months of 2022, the standard mileage rate for business travel will be 62.5 cents per mile, up 4 cents from the rate effective at the start of the year. In addition, the new rate for deductible medical or moving expenses (available for active-duty military members) will be 22 cents for the remainder of 2022, up 4 cents from the rate effective at the start of 2022.

These new rates become effective July 1, 2022. In addition, the IRS provided legal guidance on the new rate, available here.

Source: IRS

“The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices,” said IRS Commissioner Chuck Rettig. “We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses, and others who use this rate.”

The IRS usually updates the mileage rates for the following calendar year in the fall. For travel from January 1 through June 30, 2022, taxpayers should use the current rate of 58.5 cents per mile.

According to the IRS:

While fuel costs are a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs. 

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

The 14 cents per mile rate for charitable organizations remains unchanged as it is set by statute.

Midyear increases in the optional mileage rates are rare, the last time the IRS made such an increase was in 2011.

Visit the IRS website for more information.

Close Menu
%d bloggers like this: