Tax Year 2022 Update: The IRS Responds to Inflation With A Rare Midyear Mileage Rate Change
Business and Medical Mileage Change
Prices Means Infation
"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."
Though the price of fuel is definitely a major factor when it comes to calculating your mileage, there are other factors that have to be taken into account, including the rate at which your car depreciates as well as its insurance and any other fixed costs you might have.
Optional Business Standard Mileage Rate vs. Actual 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 continue to have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates, although this does require extensive recordkeeping.
Midyear increases in the optional mileage rates are rare; the last time the IRS made such an increase was in 2011.
Further details are available in IR-2022-124.
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Travis Raml, CPA