BLOG / NEWS
IRS Makes Rare Midyear Mileage Rate Adjustment
The IRS has announced 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 an automobile for business and certain other purposes.
For the final half 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 only 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. These new rates are in effect from July 1, 2022.
The 14 cents per mile rate for charitable organizations remains unchanged, as it is set by statute.
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.
Prices drive change
“The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices,” said IRS Commissioner Chuck Rettig. “We are aware a number of unusual factors have come into play involving fuel costs, and we are 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, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs, according to the IRS.
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 continue to have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates, although this does require extensive recordkeeping.
Midyear increases in the optional mileage rates are rare; the last time the IRS made such an increase was in 2011.
Further details are available in Notice 2022-03.
Disclaimer: Not Tax, Legal, Financial or Accounting Advice
Innoworks and its affiliates (collectively, “Innoworks”) do not provide tax, legal, financial or accounting advice. Any material made available to you by Innoworks, via any portal, including www.innovemp.com or via email or other correspondence from and with Innoworks and its representatives, has been prepared for informational purposes only, and is not intended to substitute, and should not be relied on for tax, legal, financial or accounting advice. You should consult an independent tax advisor, lawyer, financial advisor, and/or certified public accountant before engaging in any transaction. Neither Innoworks nor any of its corporate affiliates are fiduciaries with respect to any person or plan by reason of providing the material or content herein.
While Innoworks makes every effort to provide accurate and timely information, Innoworks does not warrant the accuracy or completeness of the materials provided, either expressly or impliedly, and expressly disclaims any warranties of merchantability or fitness for a particular purpose. Decisions based on information contained on this website are the sole responsibility of the user, and in exchange for using this website, you agree to hold Innoworks and its affiliates harmless against any claims for damages arising from any decision you make based on such information. Innoworks reserves the right to withdraw or prohibit access to the website, and to revise the software, materials, information and the services and products described in this website, at any time without notifying users.