IRS BOOSTS MILEAGE RATE BY NEARLY 5%

Vehicles Used for Business Qualify for Tax Savings of 65.5 Cents Per Mile

Tax Break for taxpayers who drive an automobile, van, pickup or panel truck for business, charitable, medical or moving purposes. 

Effective January 1, 2023, taxpayer-drivers who fit the above profile enjoy a 3 cents bump in the mileage rate … up from the 62.5 cents midyear increase in 2022. The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile … clearly more expensive in recent months.

Here’s a quick summary of the expanded IRS provisions:

• 65.5 cents per mile driven for business use.
• 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the  Armed Forces.
• 14 cents per mile driven in service of charitable organizations … unchanged from 2022.

Notably, the new mileage rates apply to qualifying vehicles regardless of how they are powered … gasoline, diesel, electric and hybrid … all good-to-go.

Keep in mind that choosing the standard mileage rate is optional. Taxpayers retain the alternative to calculate the actual costs of operating their vehicle if it has been used for business more than 50% of the time. That said, the standard rate generally must be used in the first year the car is operated for business use as described above. In subsequent years, either the standard mileage rate or itemized expenses may be preferred.

Note: Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.

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