If you deduct mileage on your taxes, you will want to be aware of a recent increase in rates by the IRS when using the optional standard mileage rates to calculate deductible costs of operating an automobile for business and other certain purposes.
The IRS recently announced an increase in the optional standard mileage rate for the last six months of 2022. The standard mileage rate for business travel will increase to 62.5 cents per mile, up 4 cents from the rate at the beginning of the year. These new rates go into effect July 1, 2022. (See Announcement 2022-13 PDF for more information.)
Midyear increases in the optional mileage rates are rare–the IRS normally updates the mileage rates each fall for the next calendar year. However, in recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2022. For travel from January 1 through June 30, 2022, taxpayers should use the rates set forth in Notice 2022-03 PDF. The 14 cents per mile rate for charitable organizations remains unchanged, as it is set by statute.
In a statement, IRS officials noted that the organization is adjusting the standard mileage rates to better reflect the recent increase in fuel prices and is taking this special step to help taxpayers, businesses, and others who use this rate. While fuel costs are a significant factor in the mileage figure, the IRS explained that other items enter into calculating mileage rates, such as depreciation, 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.
If you have questions about these new rates, or if deducting miles is appropriate for your business,
contact us today
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