As gas prices continue to soar, the Internal Revenue Service (IRS) announced on June 9 an increase in the optional standard mileage rate for the final six months of 2022.
Starting July 1 through December 31, 2022, the standard mileage rate for the business use of employees’ vehicles will increase four cents from 58.5 cents per mile to the new rate, 62.5 cents per mile, the highest rate the IRS has ever published.
The rates for deductible medical travel and moving expenses for active-duty members of the military will also increase four cents from 18 cents per mile to 22 cents per mile. The mileage rate for charitable use of an automobile will remain at 14 cents per mile, as it is fixed by law and not subject to adjustments for inflation.
Increases to the optional standard mileage rate are usually done annually, as midyear increases are rare. For example, the last time the IRS made an adjustment midyear occurred in 2011.
The standard mileage rate is used to help businesses compute the deductible costs of operating an automobile as an alternative to tracking actual costs. In addition, employers use the standard mileage rate to pay tax-free reimbursements to employees that use their automobiles for business purposes.
When mixed-use assets or personally owned assets, like automobiles, are required for their jobs, organizations are usually required to reimburse their workforce, excluding routine commuting costs
The IRS noted that fuel costs are a significant factor in the mileage figure; other items such as depreciation, insurance, and additional fixed variable costs are factored into the calculation of mileage rates. A portion of the standard mileage rate is treated as depreciation, currently factored at 26 cents per mile for 2022.
For more information regarding the standard mileage rate and how it is implemented, don’t hesitate to get in touch with your S&S representative or our main number at (304) 343-4126.