The Internal Revenue Service announced an increase in the standard mileage rate for the final six months of 2022 due to the rise in gas prices. Taxpayers can use the standard mileage rates to calculate the deductible costs of operating an automobile for business and certain other purposes. The new rates will become effective July 1, 2022.
This special adjustment made by the IRS is rare. The last time the IRS made a midyear increase was in 2011. While gas prices were a significant factor in this change, depreciation, insurance and other fixed and variable costs went into this decision making as well. Legal guidance on the new rates can be found in Announcement 2022-13.
For the last half of 2022, the standard mileage rate for business travel and medical or moving expenses (available for active-duty members of the military) increased by four cents from the beginning of the year. Charitable organizations remain the same as it is set by statue at 14 cents per mile rate. For travel rates from January 1 to June 30, 2022, taxpayers should use the rates in Notice 2022-03.
The business standard mileage rate is used to compute the deductible costs of operating an automobile for business use on behalf of tracking actual costs. The federal government and many businesses use this rate as a benchmark to reimburse their employees for mileage. Taxpayers can choose to not use the standard mileage rate and calculate the actual costs of using their vehicle instead.
Updated Mileage Rate Changes
Purpose Rates 1/1 through 6/30/22 Rates 7/1 through 12/31/22
Business 58.5 cents 62.5 cents
Medical/Moving 18 cents 22 cents
Charitable 14 cents 14 cents
Please contact BSSF or your tax advisor if you have any questions regarding mileage reimbursement rates.