Did you hear the news? The IRS announced that starting July 1st 2022, the optional standard mileage rate would be increasing for the final six months of the year. Midyear increases in the optional mileage rates are rare; the last time the IRS made such an increase was back in 2011.
What does this mean?
The standard mileage rate for the business use of employees’ vehicles will be 62.5 cents per mile—the highest rate the IRS has ever published—up 4 cents from the 58.5 cents per mile rate effective for the first six months of the year, according to IRS Announcement 2022-13.
Why is this changing?
“The IRS is adjusting the standard mileage rates 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.”
While fuel costs are a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.
For a clearer breakdown of the changes, please see the chart below:
|Jan. 1 to June 30
|July 1 to Dec. 31
|For Business Use
|For Medical Care & Moving Active Duty Armed Forces
|In Service of Charitable Organizations*
What do I need to do to?
If you use your vehicle for business use, it is very important when it comes to the 2022 tax season that you give your tax preparer the breakdown of your millage to make sure the correct rate is being applied to the time of year it reflects.
If you have any questions, please give Hunter CPA Group a phone call. We are here to help you achieve financial success in every aspect of your financial life.