Due to the recent surge in gasoline prices, the internal revenue service (IRS) has announced a rare midyear increase in the standard mileage rates. Usually, these updates happen once a year and are expected to be used optionally by taxpayers throughout the four seasons before a new change.
The revised standard mileage rates for the remaining half of 2022 are:
Starting on July 1, 2022, the standard deductible expense for business-related trips using a personal or leased vehicle is 62.5 cents per mile. This represents an increase of 4 cents from the previous rate of 58.5 cents per mile, which was valid for all business travel during the first half of 2022.
The new standard rate for using personal vehicles is 22 cents per mile, up 4 cents from the previous 18 cents between January 1 and June 31. Moving expenses are only exclusive to active military personnel on a military order.
Of the three standard mileage deductions, the mileage rate for charitable organizations remains capped at 14 cents per mile. There has been no change since 1998, and it remains the lowest deductible charge.
You can claim mileage for business trips during the first half of 2022 using the 58.5 cents rate, while trips on or after July 1, 2022, must be calculated using 62.5 cents per mile. The same applies to deductible miles for medical and moving expenses and charity.
Annually, the IRS releases new standard rates for business miles, medical and moving expenses, and charity trips. Below is a table showing the changes for each year’s deductible mileage cost.
| Business | Medicals & Moving | Charity | |
|---|---|---|---|
| 2019 | 58 cents | 20 cents | 14 cents |
| 2020 | 57.5 cents | 17 cents | 14 cents |
| 2021 | 56 cents | 16 cents | 14 cents |
| 2022a | 58.5 cents | 18 cents | 14 cents |
| 2022b | 62.5 cents | 22 cents | 14 cents |
Note: 58 cents = $0.58 and 2022a means the first half of 2022.
The Internal Revenue Service uses fixed and variable costs of operating an automobile to calculate the standard mileage rates. Variable costs include miscellaneous expenses for maintenance like oil and gas fees, parking costs, tires, and repairs.
Fixed variables, such as tax, license, and insurance, are mainly used for calculating the business mileage rate. The combination of these costs, alongside the current economy, determines the new rates for the next year.
There is technically no rule binding employers to follow the standard mileage rates. In most cases, your employer might decide to pay less than the standard mileage rate stipulated by the IRS. When this happens, you can directly negotiate with your company’s leadership and provide reasons why your reimbursement costs should be increased to match up with IRS standard rates. Otherwise, you can claim mileage deductions on your tax to make up for the unpaid differences.
Note that employee reimbursement equal to or lower than the standard mileage rate is tax-free. But if your employer pays more than the IRS standard mileage rate, then you will have to pay tax for the excess. For example, should your employer decide to reimburse you 70 cents per mile whenever you use your car for business trips, you will have to pay tax for the excess 8 cents.
In many cases, under-reimbursement or over-reimbursement occurs if there is no proper documentation of the claimable mileage. Employers, the self-employed, and other taxpayers can effectively solve this problem by utilizing a mileage tracker like Mileafy. Mileafy accurately tracks the number of miles for business trips and logs these details in compliance with IRS rules.