With year-end quickly approaching, it’s time to update your records and plan ahead for mileage reimbursement rates. The IRS Notice 2022-03 has increased the standard mileage rates for 2022, effective January 1.
Standard mileage rates for the use of a car, including vans, pickups or panel trucks, will be:
- 58.5 cents per mile for business use (up 2.5 cents from 2021)
- 18 cents per mile for medical purposes or moving purposes for qualified active-duty member of the Armed Forces (up 2 cents from 2021)
- 14 cents per mile in service of charitable organizations (same as 2021)
Mileage can vary and taxpayers may calculate the actual costs of using their vehicle rather than using the standard mileage rates. Taxpayers using the standard mileage rate must use it in the first year the car is available for business use. In following years, taxpayers can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period if the standard mileage rate is initially chosen.
The IRS notice also discusses the maximum auto cost which is used to calculate the allowance under a variable and fixed rate plan. Employers can use the fleet-average valuation rule in or the vehicle cents-per-mile valuation rule since the notice gives the maximum fair market value of employer-provided automobiles first made available to employees for personal use in calendar 2022.
Please contact BSSF or your tax advisor if you have any questions regarding mileage reimbursement rates.