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IRS increases standard mileage reimbursement rate for personal vehicles effective July 1

Change comes in response to record gas prices
Gas Prices Economy
Posted at 12:54 PM, Jun 10, 2022
and last updated 2022-06-10 16:25:15-04

KANSAS CITY, Mo. — For the second time this year, the IRS has raised the standard mileage rate for tax deductions related to operating a personal automobile for business, medical and U.S. armed services-related moving purposes.

Beginning Jan. 1, 2022, the standard mileage rate for driving a personal vehicle for business use increased 2.5 cents from last year’s rate to 58.5 cents per mile.

The IRS also bumped up the rate for medical and moving expenses by 2 cents, from 16 to 18 cents.

The reimbursement allowance for miles driven in service of charitable organizations remained the same (14 cents).

That rate will increase again effective July 1, the IRS announced Thursday. The move is in response to record-high gas prices.

"The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices," IRS Commissioner Chuck Rettig said in a statement. "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.”

During the final six months of 2022, the IRS increased the standard mileage rate for business (62.5 cents) and medical/moving travel (22 cents), an additional 4 cents.

The IRS rate also takes into account depreciation, insurance and other costs associated with operating a vehicle.

Taxpayers also can opt to calculate the actual cost of using the vehicle for the covered purposes in lieu of taking the standardized rate as a deduction.

Rep. Sharice Davids, who called on the IRS to adjust to mileage rate in May, cheers the announcement, which she said will benefit “truckers, landscaping businesses, food trucks, real estate agents, rideshare drivers, and many more” in a release Thursday.

“Rising gas prices mean the cost of doing business is going up, and I’m glad the IRS is heeding my call to get small business owners immediate relief,” she said in a statement. “These are the common sense steps to lower costs for working people that we need to be focusing on. I will continue to push for real relief as we work towards long-term energy security and inflation solutions.”

Davids also proposed suspending the federal gas tax to provide some relief at the pump.