On June 9th, the IRS announced an increase in the optional standard mileage rate for the rest of 2022.
Due to the effects of inflation and the increase in gas prices across the nation, the standard mileage rate for business travel will now be increased to 62.5 cents per mile traveled, which is 4 cents more than it was at the start of the calendar year. Included in this rate increase is the deductible for moving expenses for active-duty military members, which will also be increased by 4 cents, coming out to 22 cents per mile for the remainder of 2022.
The mileage rate for charitable organizations, however, remains at 14 cents per mile traveled because this rate is set by statute. See the IRS’s official announcement of the mileage rate increase due to inflation, effective July 1st, for more information. The previous mileage rate will still apply to the first six months of the 2022 calendar year.
Taxpayers are authorized to use the optional standard mileage rate — as opposed to tracking actual costs — to determine their deductible costs for operating a vehicle for business and other purposes. The federal government and many other businesses also use the rate as a benchmark for compensating employees for travel costs. This is particularly useful in Colorado, where employers are not required to reimburse their employees for business-related mileage.
IRS Commissioner Chuck Rettig has addressed the number of “unusual factors [that] have come into play involving fuel costs,” in the hopes of helping taxpayers and businesses overcome this recent inflation increase. There are other factors which have led to the rate increase, such as depreciation and insurance, as well as other variable and fixed costs.
The last time the IRS approved a mid-year mileage rate increase was in 2011, and it has always been a rare occurrence. IRS Commissioner Rettig hopes that this adjustment will ease the financial stress of business owners and taxpayers currently experiencing the effects of inflation and increased gas prices. July and August are still the peak driving months for consumers in the United States, despite gas prices being up by 48.7 percent since May 2022.
If you have further questions regarding this new optional standard mileage rate, contact Denver’s best accounting team at Boxelder Consulting for more information today.
|Purpose||Rates 1/1 through 6/30/2022||Rates 7/1 through 12/31/2022|