The IRS announced on June 9, 2022, it has taken a special step to adjust the standard mileage rate due to soaring gas prices. The increase in the optional standard mileage rate will be in place for the final six months of the year, effective July 1 through December 31, 2022. The standard mileage rate for the business use of employees’ vehicles will increase by 4 cents from $0.585 per mile to $0.625 per mile (IRS Announcement 2022-13).
It is rare to see the IRS increase the optional mileage rate midyear and the last time this occurred was in 2011. For travel from January 1 through June 30, 2022, taxpayers should use the rates set forth in Notice 2022-03. The new rate for deductible medical or moving expense, which is available for active-duty members of the military, will increase by 4 cents to $0.22 for the remainder of 2022, effective July 1, 2022.
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. The rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage. Taxpayers can also opt to calculate the actual costs of using their vehicle rather than using the standard mileage rates. The per mile mileage rate for charitable organizations remains unchanged at $0.14 per mile.
Mileage Rate Changes
|Purpose||Rates 1/1 - 6/30/22||Rates 7/1 - 12/31/2022|
The IRS Is adjusting the standard mileage rate 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.”
GasBuddy announced on June 9, 2022, the national average of gas in the U.S. surpassed $5 per gallon for the first time ever, crushing the previous record. “It’s been one kink after another this year, and worst of all, demand doesn’t seem to be responding to the surge in gas prices, meaning there is a high probability that prices could go even higher in the weeks ahead,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “It’s a perfect storm of factors all aligning to create a rare environment of rapid price hikes. The situation could become even worse should there be any unexpected issues at the nation’s refineries or a major hurricane that impacts oil production or refineries this summer.”