IRS Increases Some Standard Mileage Rates for Second Half of 2022 by Steven Rubin, CPA
Posted on September 23, 2022
by
Steven Rubin
To account for persistent inflation and higher fuel prices, the IRS raised some of the standard mileage rates taxpayers may use to calculate the deductible costs of operating cars, vans or trucks for business, charitable, medical or moving purposes during the final six months of 2022. Taxpayers also have the option to calculate these deductible expenses based on the actual costs they incur to use their vehicles.
For the period of July 1, 2022, to Dec. 31, 2022, the standard mileage rate for the use of an automobile is:
- 62.5 cents per mile driven for business use, up from 58.5 cents per mile for the period of Jan. 1, 2022, to June 30, 2022;
- 22 cents per mile for medical purposes (and moving expenses for active-duty members of the military), up from 18 cents per mile for the period of Jan. 1, 2022, to June 30, 2022; and
- 14 cents per mile driven in service of charitable organizations, the same rate as the first half of the year.
Taxpayers may use these standard mileage rates for up to five vehicles that they do not claim on their federal tax returns as Section 179 expenses or that they depreciate under the Modified Accelerated Cost Recovery System (MACRS). They also must use these standard rates in the first year in which they place a vehicle into service 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 are 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.
Businesses 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: Steven Rubin, CPA, is a senior manager of Tax Services with Berkowitz Pollack Brant Advisors and CPA, where he provides federal, state and local tax compliance and consulting services to corporations, closely held businesses and high-net-worth families. He can be reached at the CPA firm’s Ft. Lauderdale, Fla., office at (954) 712-7000 or info@bpbpcpa.com.
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