The amount you can deduct for miles driven is often adjusted by the IRS. For 2022, the mileage rates increased for business, medical and moving miles driven. The new rates are 58.5 cents for business miles driven and 18 cents per mile driven for moving or medical purposes. The charity mile rate hasn’t changed and remains 14 cents per mile.
The previous standard IRS mileage rates in 2021 were 56 cents per mile for business miles and 16 cents per mile for moving or medical purposes. This means there has been a 2.5 cent increase for business miles and a 2 cent increase for moving or medical miles. The chart below can help you visualize the latest changes.
What Is the Federal Mileage Rate?
2021 Federal Mileage Rate
2022 Federal Mileage Rate
Business Mileage Rate
56 cents
58.5 cents
Medical Mileage Rate
16 cents
18 cents
Moving Mileage Rate
16 cents
18 cents
Charitable Mileage Rate
14 cents
14 cents
How to Calculate Mileage Rate
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:
Depreciation
Lease payments
Registration fees
Parking fees
Gas and oil
Maintenance
Insurance
Garage rent
Tires
Licenses
Tolls
Repairs
If you use actual expenses, some expenses may be limited to the percentage of time the vehicle is used for business purposes.
Federal Mileage Rate for Moving
The federal mileage rate for moving is not for justany 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.
Federal Mileage Rate for Medical Reasons
The medical mileage deduction is open to anyone who has used their car for medical reasons. Those reasons could include:
Traveling to a doctor, hospital or other medical facilities
Taking a child or other person to receive medical care
Driving to see a mentally ill dependent if the visit(s) is recommended as part of treatment
In addition, you can also deduct parking fees and tolls for these trips.
Federal Mileage Rate for Charitable Activities
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.
Is It Complicated to Use Federal Mileage Rates?
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.
Will Federal Mileage Rates Change Again in 2023?
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.
