Gas pump image via wikipedia user Anthony Inswasty
Written by The Business Journal Staff
The Internal Revenue Service (IRS) has announced an increase in the optional standard mileage reimbursement rate for the final six months of 2022.
The new rates, effective July 1, raise the standard mileage rate for business travel to 62.5 cents per mile, a four-cent increase from the rates previously established at the beginning of the year. The IRS released the new rates in Announcement 2022-13, issued on June 9.
The rate for deductible medical or moving expenses will also rise four cents to 22 cents for the remainder of the calendar year.
The IRS is making these changes due to the striking increase in gas prices brought along by a number of factors, including Russia’s conflict with Ukraine. Normally, mileage rate updates take place once per year, in the fall for the following calendar year.
Taxpayers should use the rates outlined in Notice 2022-03 for travel occurring from Jan. 1 through June 30.
“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.”
Fuel costs are the primary reason for the increase in mileage rates, although other items are considered in the calculation of mileage rates including depreciation and insurance, as well as other fixed and variable costs.
The rate for charitable organizations is set to remain at 14 cents per mile.
Taxpayers may use standard optional mileage rates to determine the deductible costs of operating a vehicle for business-related purposes. The optional business standard mileage rate is used to calculate deductible costs of operating vehicles for business use as opposed to tracking actual costs.
The rate is also used by the federal government and a number of businesses to reimburse mileage for employees.
This marks the first time since 2011 that a mileage rate has been adjusted midyear. That year, fuel prices also influenced the IRS increase in mileage rates.