Aug 30, 2022
Jen Lindstrom of the CPA firm Arledge & Associates looks at changes to mileage rules.
Q. How have mileage reimbursement rates changed recently?
A. As of July 1, 2022, the Internal Revenue Service raised the optional standard mileage rate to help offset the rising cost of gas. Through Jan. 1, 2023, the revised rates are:
- Business: 62.5 cents per mile, up from 58.5 cents
- Medical/Moving: 22 cents per mile, up from 18 cents
Q. Which rates should taxpayers use to calculate reimbursement for miles traveled between Jan. 1 and June 30, 2022?
A. Taxpayers should use the previously applicable rates for any miles traveled before the new rates went into effect:
- Business: 58.5 cents per mile
- Medical/Moving: 18 cents per mile
Q. How does the change affect charitable organizations?
A. Reimbursement for charitable organizations is set by statute. The 14 cents per mile standard rate remains unchanged.
Q. What factors were considered in the increase and how can businesses use the standard mileage rates?
A. Prior to the July 1 increase, the last such adjustment the IRS made was in 2011. In addition to adjustments for higher gas prices, the calculation factors in depreciation, insurance and other fixed and variable expenses. Businesses can use the new standard mileage rate to calculate the deductible costs of operating vehicles used for qualifying business, medical, moving or charitable purposes.
Q. What should taxpayers who deduct mileage be aware of when calculating qualifying travel expenses?
A. Taxpayers have the option to calculate the actual costs of using their vehicle instead of accepting the standard mileage rates. Actual expense methods may yield different results than standard mileage calculations. Your accountant can determine which option is better for you. Taxpayers using any depreciation method under the Modified Accelerated Cost Recovery System or claiming a Section 179 deduction may not also use the business standard mileage rate for the same vehicle.
Jen Lindstrom, CPA is a tax manager at Arledge, an Edmond-based public accounting firm. Arledge is a recognized leader in the accounting industry offering practical solutions in the areas of tax planning, auditing, consulting, accounting advisory services and client accounting.
This article contains general information only and does not constitute tax advice or any other professional services. Before making any decisions or taking any action that might affect your income taxes, you should consult a professional tax advisor. This article is not intended for and cannot be used to avoid future penalties that may be imposed by the Internal Revenue Service.