New IRS Standard Mileage Rates for 2023

Do you use your personal vehicle for business, charitable, or medical purposes? If the answer is “yes,” you could qualify for an income tax deduction. Most taxpayers use the IRS Standard Mileage Rate to deduct qualified vehicle expenses. Alternatively, you can deduct total actual vehicle expenses if that amount is higher – and you track all of the fuel, repair, and maintenance expense records. Whether you deduct the standard mileage rate or actual expenses, you must track your miles driven during the year.

The standard mileage rate per mile for qualified vehicle use is determined each year by the IRS based on data about the cost of operating and maintaining a vehicle, including passenger cars, vans, pickups, and panel trucks. In recent years, the rate per mile has risen and fallen based on the price of gasoline. With gas prices up significantly since 2020, the IRS recently issued the new standard mileage rates for 2023 that reflect those higher gas prices. 

Beginning on January 1, 2023, the standard mileage rates are:
 

  • 65.5 cents per mile driven for business use, up 3.0 cents from the adjusted rate that was effective for the last six months of 2022
  • 22 cents per mile driven for medical or moving purposes, the same as the adjusted rate that was effective for the last six months of 2022
  • 14 cents per mile driven for charitable purposes to serve a qualified tax-exempt organization. The charitable rate is set by statute, so it doesn’t change.

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. Also, you can choose the standard mileage rate one year and actual expenses the next year, whichever is more beneficial for you. 

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). And if you use more than one vehicle, mileage must be tracked for each vehicle you use for business, charitable, or medical purposes.

Tax deductions for using your vehicle 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. Want to know more about tax deductions related to the use of your vehicle? Check out the IRS website at https://www.irs.gov/newsroom/irs-issues-standard-mileage-rates-for-2023-business-use-increases-3-cents-per-mile.