As of July 1, 2022, the standard mileage rate taxpayers may use to determine the amount of their car usage that is tax deductible for business and other purposes will be 62.5 cents per mile. The annual mileage fee increase is 4 cents.
Instead of keeping track of the actual expense of business-related vehicle usage, taxpayers might decide to utilize the business standard mileage rate. The federal government and many private companies utilize this rate as a standard for paying out mileage reimbursements to workers. Taxpayers always have the option of estimating the real expenses of operating their car rather than utilizing the statutory mileage rates.
Also, beginning in 2022, active duty military personnel will be entitled to deduct 22 cents per mile for medical or moving-related expenditures. This new rate is up 4 cents from the rate effective at the start of 2022.
Taxpayers should notice that the 14 cents per mile charge for nonprofit organizations remains intact as it is established by legislation.
Normally, the IRS modifies the mileage rates once a year, often in the autumn, for the following calendar year. As a reminder, for travel from January 1 through June 30, 2022, taxpayers should utilize the existing mileage rates (58.5 cents per business mile and 18 cents per medical and relocating – service personnel only) (58.5 cents per business mile and 18 cents per medical and moving – military members only).
The rate hikes are a specific adjustment for the last months of 2022 in reaction to recent fuel price rises. While fuel costs are an important element in the mileage number, other things play into the computation of mileage rates, such as depreciation and insurance, and other fixed and variable expenditures. Midyear hikes in the optional mileage rates are infrequent. The last time the IRS imposed such an increase was in 2011.