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In early June, the IRS announced an increase in the optional standard mileage rate for the last six months of 2022. According to the IRS, this special mid-year adjustment was made to better reflect soaring gas prices. For the final six months of the year, the standard rate for business travel will be 62.5 cents per mile, up 4 cents from the rate effective at the start of 2022.
The optional standard mileage rate is used to compute the deductible costs of operating an automobile for business instead of having to track actual costs. The rate is also used as a benchmark by the federal government and many businesses for reimbursing employees for mileage.
When the IRS released the June rate adjustment, it noted that additional costs besides fuel, such as depreciation, insurance, and other variables, factor into mileage rates. The IRS went on to suggest that at any time, taxpayers may calculate the actual costs of using their vehicle for business instead of using the optional standard mileage rate.
This is only the third time since 2008 that the IRS has changed the mileage rate mid-year for the remainder of the year. In all three midyear adjustments, the IRS cited its reason for the increase was to accommodate rising costs of fuel.
We are available to discuss how the optional standard mileage rate changes may impact your tax returns. To schedule a consultation, please click on the button below and request a time that works best for you.
