For the first time since 2011, the IRS has made a midyear adjustment to the optional mileage rate used to calculate the deductible costs of operating an automobile for business and other specific purposes. The agency said the change is in recognition of recent gasoline price increases.
In Announcement 2022-13, released June 9, 2022, the IRS increased the standard mileage rate for the final six months of 2022, starting July 1. During that period, 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 rate for charitable organizations is set by statute and will remain unchanged at 14 cents per mile.
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. It is based on the fixed and variable costs of operating an automobile, such as fuel, depreciation and insurance. The federal government and businesses also use the rate as a benchmark to reimburse their employees for mileage.
Taxpayers always have the option of calculating the actual costs of using their vehicle instead of using the standard mileage rates.
This Legal Update is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. © 2022 Zywave, Inc. All rights reserved.