IRS Increases Mileage Deduction by Four Cents Per Mile for the Last Six Months of 2022
By Michael D’Addio, Principal, Tax & Business Services
Due to the increase in the price of gasoline, the IRS announced an increase in the optional mileage deduction by $0.04/mile, for the final six months of 2022 for business and medical use of one’s automobile. This change will be effective for all business and medical travel miles incurred after July 1, 2022.
The IRS allows the use of a flat mileage rate in determining the deduction amount in a number of circumstances:
- Business Mileage: For the business use of an automobile, an individual can either deduct actual operating costs or actual mileage traveled using a flat IRS rate. The mileage rate applies to business trips in an auto, van, pickup or panel truck. A taxpayer using the mileage rate cannot deduct actual auto expenses in addition to the flat mileage rate. Parking fees and tolls are allowed in conjunction with the mileage rate.
The IRS had previously set the business mileage rate for 2022 at $0.585/per mile. Including the rate adjustment the new rate will be $0.625.
- Medical Travel Mileage: Travel costs to a doctor’s office, hospital or clinic where a taxpayer, taxpayer’s spouse or dependent receives medical care may be included in overall medical expenses. Taxpayers can deduct actual out-of-pocket expenses for the use of an auto or can use a flat mileage rate (plus parking fees and tolls).
The IRS had previously set the mileage allowance for medical travel mileage at $0.18/ mile. Including the rate adjustment the new rate will be $0.22 /mile.
- Charity Mileage: While taxpayers normally cannot deduct the value of property used by a charity, the cost of using a personal car to provide charitable volunteer services may be deducted. Either actual expenses or a flat mileage rate can be used.
The IRS had previously set the mileage allowance for 2022 charity mileage at $0.14/mile. This rate remains unchanged for the balance of the year.
Those using their automobiles for business or medical purposes should be certain to track their usage for each half of the tax year, as usage after June 30, 2022 will produce a higher deduction.
Additionally, employers who reimburse employees for business travel mileage based on the federal mileage rate should also take note of this change.
For questions concerning the implications of this action by the IRS, do not hesitate to contact your Marcum tax professional.