The IRS has taken action against rising gas prices by increasing the standard mileage deduction rate for business trips.
Starting on July 1, the standard mileage rate — used to deduct eligible business trips in a vehicle on tax returns — increases by 4 cents to 62.5 cents per mile, according to the IRS. The new rate applies to trips during the second half of 2022.
The rate for medical trips or active-duty military moving will also increase by 4 cents, allowing eligible filers to claim 22 cents per mile.
A Response to Hikes in Gas Prices
"The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices," said IRS Commissioner Chuck Rettig when making the announcement on June 10.
"We are aware of some unusual factors that have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses, and others who use this rate."
The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use instead of tracking actual costs.
This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.
About the Standard Mileage Rate
While a taxpayer can choose to deduct actual expenses or take the standard mileage deduction, the taxpayer who takes the standard deduction has a much simpler and less error-prone job to do. The odometer checks are necessary in either case to enter the total number of miles used for business. However, no receipts need to be saved if the standard mileage amount is used.
Commuting to a regular place of business is not deductible, but driving to client meetings or events may be. A taxpayer can deduct mileage when providing services, like volunteering at an event for a 501(c)3 charitable organization.
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