The Internal Revenue Service today delivered a bit of good news to taxpayers who use their vehicles for medical and business purposes. The standard optional mileage rates used to calculate tax deductible amounts are going up on July 1.
The increase of the rates, which last were adjusted in December as part of the IRS' annual review of transportation costs, comes as the nation's national average price for a gallon of regular gasoline nears $5.
"The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices," said IRS Commissioner Chuck Rettig, who also had heard from members of Congress urging the increases. "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."
New rates for last six months of year: On July 1, the mileage rates will go, per IRS Annoucement 2022-13, to 62.5 cents per mile for business travel.
Travel for medical reasons will go to 22 cents per mile.
The 22-cent rate also applies to allowable relocation mileage, which the Tax Cuts and Jobs Act of 2017 limited to use by military personnel.
The new rates will be in effect through December.
First half of 2022 still under lower rates: Eligible business, medical, and moving miles driven between Jan. 1 and June 30 will be calculated at 4-cent lower previously announced rates.
That's 58.5 cents per mile for business drivers and 18 cents per mile for medical and moving claims.
The standard optional mileage rate for charity-related miles remains at 14 cents per mile.
The philanthropic driving rate doesn't change because it's set by statute, and is not adjusted by the IRS when it makes its annual changes to the other vehicular travel rates.
Keep good road records: The mid-year changes underscore the need for accurate and complete records of tax-deductible driving.
The changes also mean that when taxpayers file their taxes next year, they'll have to do a bit more figuring to claim their transportation expenses that spanned the year.
But tax software should make that job easy. And even if you do the math by hand, it's worth to save every tax penny you can.
You also might find these items of interest:
- Make the most of tax-deductible medical miles
- Most states now collect fees on energy-efficient autos
- As fuel prices continue rising, some states enact gas tax holidays