IRS Increases Business Mileage Deduction Rate For Remainder Of 2022
The Internal Revenue Service announced last Thursday an increase in the optional standard mileage rate for the final 6 months of 2022.
Taxpayers may use the optional standard mileage rates to calculate the deductible costs of operating a vehicle for business and other purposes.
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 58.5 cents per mile rate effective at the start of the year.
The new rate becomes effective July 1, 2022.
The IRS provided legal guidance on the new rates in Announcement 2022-13.
In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2022.
The IRS normally updates the mileage rates once a year in the fall for the next calendar year. For travel from January 1 through June 30, 2022, taxpayers should use the rates set forth in Notice 2022-03.
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 a vehicle 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 rate.
Midyear increases in the optional mileage rates are rare. The last time the IRS made such an increase was in 2011.