Tax Memo – IRS Mileage Rate Going Up For The 2nd Half of 2022

This memo is important reading for:

1. An Employee who gets reimbursed for mileage. As of July 1, 2022 you can increase your per-mile rate to 62.5¢. 
   1. Employees, have you been reimbursed for the full IRS mileage rate in the past? Many employees are not told what the true rate should be and are actually reimbursed less per mile. Check your records and if you were given less per mile than the following, demand your employer reimburse the shortfall:
      1. Mileage Rates: 2020 57.5¢, 2021 56¢, 2022 Jan-June 58.5¢, July-Dec 62.5¢
2. Business Owners. Your auto / travel expenses will now be higher to accommodate the increase in gas prices.

If you know anyone in these situations, please share this memo with them.

Red Bank, NJ — The Internal Revenue Service today announced an increase in the optional standard mileage rate for the final 6 months of 2022. Taxpayers may use the optional standard mileage rates to calculate the deductible costs of operating an automobile for business and certain other purposes.

For the final 6 months of 2022, the standard mileage rate for business travel will be 62.5 cents per mile, up 4 cents from the rate effective at the start of the year. The new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents for the remainder of 2022, up 4 cents from the rate effective at the start of 2022. These new rates become effective July 1, 2022. The IRS provided legal guidance on the new rates in Announcement 2022-13PDF, issued today.

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2022. The IRS normally updates the mileage rates once a year in the fall for the next calendar year. For travel from January 1 through June 30, 2022, taxpayers should use the rates set forth in Notice 2022-03PDF.

“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.” 

While fuel costs are a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs. 

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. 

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

The 14 cents per mile rate for charitable organizations remains unchanged as it is set by statute.

Midyear increases in the optional mileage rates are rare, the last time the IRS made such an increase was in 2011.

Questions? Concerns? Call me on (732) 673-0510.