The Internal Revenue Service (IRS) just released standard mileage rates that taxpayers must use when filing 2022 income taxes in 2023 if they are claiming a mileage deduction for a vehicle they own or lease. These rates set IRS allowances for the deductible part of the cost of driving for business and for charitable, medical, and moving purposes. The rates are adjusted on an annual basis (except for charitable-organization driving, which is set by statute) and depend on whether the vehicle is used for business, medical, or charitable purposes.
- The IRS annually publishes three standard rates used to calculate deductions for mileage driven for business, medical/moving, and charitable purposes
- The rates for 2022 are 58.5 cents/mile for business; 18 cents/mile for medical/military moving expenses; and 14 cents/mile for charitable driving.
- Deductions for unreimbursed employee travel expenses and non-military moving expenses were eliminated by the TCJA.
- The charitable rate is set by statute and does not necessarily change each year.
- Additional rates and valuations for 2022 include the taxable value of an employer-provided vehicle used for personal purposes.
Under the Tax Cuts and Jobs Act (TCJA), taxpayers can no longer claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. In addition, moving-expense deductions are only available to members of the Armed Forces on active duty moving under orders to a permanent change of station.
Standard Optional Mileage Rates for 2022
For 2022, the business mileage rate is 58.5 cents per mile; medical and moving expenses driving is 18 cents per mile; and charitable driving is 14 cents per mile, the same as last year. The mileage rates are considered optional because taxpayers can always calculate the actual cost of using their vehicle instead of based on mileage.
- The 2022 business use allowance of 58.5 cents per mile driven is up 2.5 cents from 2021;
- The medical and moving expense rate of 18 cents per mile driven in 2022 has been raised 2 cents from 2021; and
- The 2022 rate of 14 cents per mile driven in service of charitable organizations, is set by statute and remains unchanged from last year.
Special Rules for Claiming Standard Mileage
When using the standard mileage rate for tax purposes, you must follow rules established by the IRS in order to claim a deduction:
- You can only claim standard mileage for a vehicle you own or lease.
- You must log the mileage for each deductible use; total mileage for the year; and the date, destination, and purpose of each trip.
- In order to use the standard mileage rate, taxpayers must use it the first year their vehicle is available for business use.
- In later years you can choose between the standard mileage rate and actual expenses.
- Leased vehicles must use the standard mileage rate for the entire lease period including lease renewals if the standard mileage rate is chosen in the first year.
How Mileage Rates and Vehicle Valuation Are Determined
The IRS uses an independent contractor to conduct an annual study of the fixed and variable costs of operating an automobile to set the standard mileage rates for business, medical, and military moving deductions. As previously noted, the standard mileage rate for charitable use is set by statute.
If you are provided a vehicle by your employer that you also use for personal use, regulations determine the amount that must be included in your income and wages. This is typically based on the vehicle's Fair Market Value (FMV). One of two special valuation rules, the fleet-average valuation rule or the vehicle cents-per-mile valuation rule, may also be used. These valuations are subject to limitations and, for 2022, may not exceed $56,100.
Additional IRS Vehicle Rates and Valuations for 2022
Included in the publication of standard mileage rates for 2022 are several additional updated rates and costs for the tax year 2022.
2022 Basis Reduction Amount
For automobiles a taxpayer uses for business purposes, the portion of the business standard mileage rate treated as depreciation is 25 cents per mile for 2018, 26 cents per mile for 2019, 27 cents per mile for 2020, 26 cents per mile for 2021, and 26 cents per mile for 2022.
Maximum Standard Automobile Cost for 2022
For purposes of computing the allowance under a fixed and variable rate (FAVR) plan, the standard automobile cost may not exceed $56,100 for automobiles (including trucks and vans).
Maximum Value of Vehicles First Made Available in 2022
For purposes of the fleet-average valuation rule and the vehicle cents-per-mile valuation rule, the maximum FMV of automobiles (including trucks and vans) first made available to employees in calendar year 2022 is $56,100.