What is the IRS mileage reimbursement rate for 2022?
Taxpayers can deduct some costs of operating a car for business purposes on their tax return: here are the limits for 2022.
In June of this year, the Internal Revenue Service (IRS) announced an increase in the optional standard mileage rate for the remaining months of 2022. Taxpayers can use these rates to calculate the deductible costs of operating a car for business and a select number of other purposes. Being able to deduct these costs is critical for some contractors and businesses who use their car for work and thus see wear and tear that they would not be refunded for if companies were not able to deduct the cost from their total revenue.
According to the IRS, “the optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs.” This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.
What is the IRS mileage reimbursement rate for 2022?
From July 1 through December, the standard mileage rate for business travel has been 62.5 cents per mile, 4 cents higher than the rate in effect at the beginning of the year. On the other hand, the rate for deductible medical or moving expenses, available to active duty military members, is 22 cents, 4 cents more than the rate in effect as of early 2022. The only organizations that did not see an increase were those classified as “Charitable,” which remained at 14 cents per mile.
The IRS normally updates mileage rates once a year in the fall of the next calendar year; however, after the sharp increase in the price of gasoline, the IRS decided to make this special adjustment for the last months of 2022. The last time the IRS made a special increase was in 2011.
“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,” said IRS Commissioner Chuck Rettig when the agency announced the mid-year changes.
What factors does the IRS consider for mileage rates?
While fuel costs are an important factor in the mileage figure, other elements go into calculating mileage rates, such as depreciation and insurance and other fixed and variable costs.