The Internal Revenue Service has issued the optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Effective January 1, 2023, the rates for using a car, van, pickup or panel truck will be:
- 65.5 cents per mile driven for business use
- 22 cents per mile for medical or moving purposes for qualified active-duty members of the Armed Forces
- 14 cents per mile driven for charitable purposes
These rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles. Since the rate increase for the final six months of 2022, the only rate that has changed is the cents per mile for business use, which increased by 3 cents.
The business rate is based on an annual study of the fixed and variable costs of operating a vehicle, while the medical moving rate is based on variable costs. The charitable rate is set by statute.
Taxpayers always have the option to calculate the actual costs of using their vehicle rather than using the standard mileage rates. It is important to remember that taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses under the Tax Cuts and Jobs Act.
The optional standard mileage rates, as well as the maximum automobile cost used to calculate the allowance under a fixed and variable rate (FAVR) plan, are outlined in Notice 2023-03.
Please contact your BSSF advisor if you have any questions regarding mileage reimbursement rates.