The rate for the second half of 2022 is set at $65.5 per mile driven for business purposes, an increase of 3 cents from the midyear increase.
The optional standard mileage rates for 2023 have been released by the Internal Revenue Service and are used to determine the costs that are deductible when driving a car for work, charity, medical care, or moving.
Starting on January 1, 2023, the standard mileage rates for the use of a car (as well as vans, pickups, or panel trucks) for business purposes will be:
- 65.5 cents per mile driven, an increase of 3 cents from the midyear increase setting the rate for the second half of 2022.
- For eligible active-duty members of the armed forces, the mileage rate for moving or medical needs is 22 cents, in line with the midyear rate increase planned for the second half of 2022.
- When driving for charitable organizations, the rate is 14 cents per mile; it is regulated by law and remains
These rates are applicable to electric and hybrid-electric vehicles, as well as gasoline and diesel vehicles.
An annual analysis of the fixed and variable costs of driving an automobile serves as the foundation for the standard mileage rate for business use. The medical and moving rates are based on variable costs.
The Tax Cuts and Jobs Act prohibits taxpayers from deducting unreimbursed employee travel expenses as a miscellaneous itemized deduction, which is important to note. Additionally, taxpayers are not permitted to write off their moving costs unless they are active-duty military personnel moving to a new station permanently. Moving Expenses for Armed Forces Members has more information.
The decision to determine the actual costs of operating a vehicle by the taxpayer, as opposed to using the standard mileage rates, is always up to them.
Taxpayers are permitted to use the standard mileage rate, but they are typically required to do so during the first year that the car is available for business use. Later on, they will have the option of using actual expenses or the standard mileage rate. If the standard mileage rate is selected, leased vehicles shall be calculated using the standard mileage rate method for the entire term of the lease (including renewals).
Notification 2023-03 In addition to the maximum automobile cost used to determine the allowance under a fixed and variable rate (FAVR) plan, the optional 2023 standard mileage rates are included in the PDF. The notice also specifies the maximum fair market value of vehicles provided by the employer that may be valued under either the fleet-average valuation rule or the vehicle cents-per-mile valuation rule beginning in the calendar year 2023.
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