In short: The IRS has increased its standard mileage rate for business miles from 58.8 cents/mile to 62.5 cents/mile, in response to higher fuel prices
The IRS has announced an update to the to the standard mileage rate, effective July 1, 2022. The standard mileage rate for business related miles will increase from 58.8 cents per mile to 62.5 per mile. The IRS also moved to increase the standard mileage rate for medical and moving expenses from 18 cents per gallon to 22 cents per gallon.
The mileage rate that applies to the deduction for charitable contributions remains fixed at 14 cents per mile.
A mid-year rate increase is unusual as mileage rates are typically set once per year, in the fall. The IRS noted in Announcement 2022-13 that this special increase of rates was made in response to the recent rise in fuel prices. The last mid-year adjustment to rates occurred in 2011.
The standard mileage rate is an optional method that allows taxpayers to deduct vehicle expenses without having to track and report each actual expense incurred. Many businesses and organizations also use the standard mileage rate as guide to reimbursing employees for their travel expenses.
For more information on the IRS standard mileage rate change and for any other questions about how to effectively optimize taxes for your business, contact your Bennett Thrasher tax advisor.