7 minute read
The amount you can deduct for miles driven is typically adjusted every year by the IRS. For 2022, though, the IRS took the unusual step of increasing the mileage rate in the middle of the year. The mileage rates increased on July 1, 2022 for business, medical and moving miles driven.
The IRS took this unusual step to help ease the pain of inflation and increased gas prices on taxpayers.
The new rates are 62.5 cents for business miles driven and 22 cents per mile driven for moving or medical purposes. The charity mile rate hasn’t changed as it is set by law at 14 cents per mile.
The previous standard IRS mileage rates in 2022 were 58.5 cents per mile for business miles and 18 cents per mile for moving or medical purposes. This means there has been a 4 cent increase for business miles and a 4 cent increase for moving or medical miles. This is a fairly significant increase – the increase from 2021 to 2022 was only 2 cents! The chart below can help you visualize the latest changes.
| 2021 Federal Mileage Rate | 2022 Federal Mileage Rate | |
| Business Mileage Rate | 58.5 cents | 62.5 cents |
| Medical Mileage Rate | 18 cents | 22 cents |
| Moving Mileage Rate | 18 cents | 22 cents |
| Charitable Mileage Rate | 14 cents | 14 cents |
Of course, every taxpayer needs to meet certain requirements and itemize their taxes in order to claim a deduction for miles driven. If you qualify to deduct mileage, the federal IRS mileage rate is a way for you to calculate how much you can reduce your taxable income.
Keep in mind that your tax deduction also depends on how you use your vehicle. If you’re self-employed or a contractor, you could be able to deduct the cost of the use of your car for business purposes. However, commuting to work is generally not considered deductible mileage.
There are two ways to calculate the mileage deduction for the business use of a vehicle:
1) Take the standard mileage deduction. The most common way to calculate your driving expenses is to multiply the number of business miles you drove by the federal mileage rate.
2) Use actual expenses. If you prefer not to track your mileage, you can also track and deduct the actual expenses you have while using the vehicle for business purposes. These expenses could include:
If you use actual expenses, some expenses may be limited to the percentage of time the vehicle is used for business purposes.
The federal mileage rate for moving is not for just any traveling activities or vacations. It’s for moving, and it’s currently specifically limited to active duty members of the military when they have to move due to a permanent change of station.
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The medical mileage deduction is open to anyone who has used their car for medical reasons. Those reasons could include:
In addition, you can also deduct parking fees and tolls for these trips.
If you have used your vehicle to help a charity or to travel somewhere to volunteer, the mileage can be deductible. If you prefer not to deduct your mileage, you can instead deduct your unreimbursed out-of-pocket expenses, such as gas and oil, so long as the expenses relate directly to using your vehicle to give to a charity. For the charitable mileage deduction, you can't deduct repair and maintenance costs or any other vehicle expenses like registration fees or insurance.
Any mileage deductions for moving, medical or charity purposes require you to itemize those miles or expenses on your tax return. Self-employed individuals can claim mileage deductions as a business expense on their Schedule C.
Perhaps the most difficult part of using the mileage deduction is actually tracking your mileage. If the IRS audits you, you might need to substantiate your deductions by proving a log of miles you drove. It’s a best practice to track your mileage either manually or with an app, such as MileIQ.
In light of this change, many taxpayers will have questions about how this will work! Some may be confused and think the new rate applies for the whole year, or they may not realize that the change occurred at all. This year, it is even more important that you keep track of miles driven accurately, so you can take advantage of the higher rates!
The way you claim the deduction will remain unchanged, however, the amounts will vary depending on when they occurred. Miles driven before July 1, 2022 will be allowed at the mileage rates announced earlier. Miles driven after June 30, 2022 will be calculated at the new, higher rates.
All in all, mileage deductions are a great way to save on taxes for many individuals and businesses, especially self-employed individuals. The rates can change yearly, so if the IRS will release a new rate, it will be toward the end of the year. Chances are the rates will either stay the same or slightly increase again.
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