Starting on July 1, 2022, the standard mileage rate for business use vehicles will increase by four cents per mile (from 58.5¢ to 62.5¢ per mile) for the last six months of 2022. The IRS uses this rate to calculate the deductible costs of operating a vehicle for business use and certain other purposes. In addition, employers use this rate to reimburse employees that use their own automobiles for business purposes.
It is unusual for the IRS to make a midyear adjustment, however, they thought it would be beneficial to make the change due to the current spike at the gas pumps caused by a rise in demand and supply shortages. In a release issued June 9, (IR-2022-124), the IRS noted that it is adjusting the standard mileage rates to better reflect the recent increase in fuel prices.
IRS Commissioner Chuck Rettig said, “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.” This optional standard rate can be utilized by businesses and individuals so they do not have to keep track of actual costs of using their vehicles.
Generally, the optional standard mileage rates are set annually, but due to these unique circumstances the IRS thought a mid-year correction was needed for the second half of the year. For travel from January 1 through June 30, 2022, taxpayers should use the rates set forth in Notice 2022-03.
The rate for deductible medical or moving expenses (available only for active-duty military) is also increasing by four cents per mile, and will be 22¢ per mile beginning July 1, 2022. The rate of 14¢ per mile for charitable organizations remains unchanged as it is set by statute. Complete guidance on the new rates can be found in Announcement 2022-13.
If you need assistance with any tax issues, please contact GYF at 412-338-9300.