IRS Adjusts 2022 Standard Mileage Rates

Gas prices have spiked dramatically since late in 2021, when the IRS announced the standard mileage rates for 2022. The standard rate per mile is determined each year by the IRS based on data about the cost of operating and maintaining a vehicle. Businesses depend on the IRS mileage rate guidelines for deducting vehicle expenses and for reimbursing employees for their personal vehicle use. Individuals may also use the IRS rates to calculate the deductible portion of using their vehicle for medical or moving transportation purposes.

The IRS follows the news just like you do. So, in response to the jump in gas prices, the IRS decided to increase the 2022 standard mileage rates mid-year. Starting July 1, the adjusted 2022 standard mileage rates are:

  • 62.5 cents per mile driven for business use, up 4 cents from the January to June 2022 rate
  • 22 cents per mile driven for medical or moving purposes, up 4 cents from the January to June 2022 rate

The IRS mileage rate changes are optional. However, it makes no sense to use the lower rates for business expense deductions. Businesses who do not raise the rate for employee reimbursements will probably have some very unhappy workers to contend with. 

The 14 cents per mile rate for using a vehicle for charitable purposes stays the same. The charitable rate is set by statute, so it doesn’t change. Another thing hasn’t changed – whether you deduct the standard rate or actual expenses, you must track your miles driven during the year. Most people base their mileage deduction on the standard rate because it’s easier and often results in a larger deduction amount. 

Using the standard mileage rate can really add up to a substantial tax deduction. Remember that you always have the option of calculating the actual costs of using your vehicle and deducting the higher of the two options. No matter which of the two expense methods you choose, you must track your overall mileage driven during the year, and track the miles by category (e.g., business and personal).

Taking vehicle deductions for business, charitable, or medical purposes involves a lot of tracking, but the effort can be worth it. You can use mileage tracking apps to help. Once you get your tracking system down, you’ll see that those mileage deductions can add up and reduce the bottom line on your taxes. And, starting July 1, 2022, those mileage deductions will add up even more quickly.