NEW MILEAGE RATES EFFECTIVE JULY 1, 2022
The Internal Revenue Service today announced an increase in the optional standard mileage rate. Taxpayers use the optional standard mileage rates to calculate the deductible costs of operating an automobile for business and certain other purposes. In recognition of recent gasoline price increases, the IRS made a special adjustment to the standard mileage rate for the final months of 2022.
The IRS normally updates the mileage rates once a year in the fall for the next calendar year, however, the IRS became aware of a number of unusual factors that came into play particularly involving fuel costs. As a result, they decided to take this special step to help taxpayers, businesses and others who use the standard mileage rate.
The new rates will become effective July 1, 2022. For the final 6 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. The new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents for the remainder of 2022, up 4 cents from the rate effective at the start of 2022. The 14 cents per mile rate for charitable organizations remains unchanged as it is set by statute.
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. Clients will be required to provide two separate amounts to their tax professionals in 2023. Total mileage before July 1 and total mileage after June 30.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
In summary, for the 2022 taxation year, the following standard mileage rates are in effect.
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