IRS Increases Some Standard Mileage Rates for 2022 by Kevin McNally, JD
Posted on January 19, 2022
by
Kevin McNally
For the first time in two years, the IRS has raised some of the optional standard mileage rate that taxpayers may use to calculate deductible costs of operating cars, vans or trucks for business, charitable, medical or moving purposes in 2022. Taxpayers also have the option to calculate these expenses based on the actual costs they incur to use their vehicles.
Effective Jan. 1, 2022, the standard mileage rate for the use of an automobile is:
- 5 cents per mile driven for business use, up from 56 cents per mile in 2021;
- 18 cents per mile for medical purposes, up from 16 cents per mile in 2021; and
- 14 cents per mile driven in service of charitable organizations , unchanged from 2021
Taxpayers may use the standard mileage rate for up to five vehicles that they do not claim as Section 179 expenses or depreciate under the Modified Accelerated Cost Recovery System (MACRS). In addition, they must use the standard mileage rate in the first year a vehicle is available for business use. In later years, they may elect to use actual expenses, unless the vehicle is under a lease.
Before applying the standard mileage rates, taxpayers must recognize that they generally may not claim miscellaneous itemized deductions for unreimbursed employee travel expenses. Exceptions exist when taxpayers are self-employed, eligible educators, performing artists, certain government officials and members of the Armed Forces. Under current law, taxpayers also prohibited from claiming a deduction for moving expenses unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station.
Employers may rely on these optional standard mileage rates to reimburse workers for the ordinary and necessary costs employees incur when using their personal vehicles for business purposes. Alternatively, employers may require workers to track the actual business use of their vehicles and submit documentation to substantiate the costs for which they request reimbursement. In general, companies may deduct employee reimbursements as business expenses, while employees may exclude those reimbursed amounts from their taxable income.
About the Author: Kevin McNally, JD, is a senior manager of Tax Services with Berkowitz Pollack Brant Advisors + CPAs, where he works with high-net-worth families, private equity firms and real estate development businesses on a broad range of tax matters, including complex deal structuring. He can be reached at the CPA firm’s Miami office at 305-379-7000 or at info@bpbcpa.com.
← Previous
