IRS Increases Optional Mileage Rates for Last 6 Months of 2022 Due to Higher Fuel Prices

(Parker Tax Publishing June 2022)

The IRS announced that it is modifying Notice 2022-3 by revising the optional standard mileage rates for computing the deductible costs of operating an automobile for business, medical, or moving expense purposes and for determining the reimbursed amount of these expenses that is deemed substantiated. The revised rates, which are due to the increase in fuel prices, become effective July 1, 2022. Announcement 2022-13.

In Notice 2022-3, the IRS issued the 2022 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes. The notice also provided the amount taxpayers must use in calculating reductions to a vehicle's basis for the portion of the standard mileage rate treated as depreciation, as well as the maximum standard automobile cost that may be used in computing a vehicle allowance under a fixed and variable rate plan.

Last week, the IRS issued Announcement 2022-13 which modifies Notice 2022-3 for the final six months of 2022 by revising the optional standard mileage rates for computing the deductible costs of operating an automobile for business, medical, or moving expense purposes and for determining the reimbursed amount of these expenses that is deemed substantiated. According to the IRS, this modification is necessary due to recent increases in the price of fuel.

For the final six months of 2022, the revised standard mileage rates are:

(1) Business: 62.5 cents per mile (up from 58.5 cents per mile); and

(2) Medical and moving: 22 cents per mile (up from 18 cents per mile).

These new rates become effective July 1, 2022. For travel from January 1, 2022, through June 30, 2022, taxpayers should use the rates set forth in Notice 2022-3.

The mileage rate that applies to the deduction for charitable contributions is fixed under Code Sec. 170(i) at 14 cents per mile.

Observation: The IRS noted that mid-year increases in the optional mileage rates are rare. The last time the IRS made such an increase was in 2011.

For a discussion of the rules relating to the use of the standard mileage rate, see Parker Tax ¶91,110. For a discussion of transportation costs relating to medical care, see Parker Tax ¶82,535. For a discussion of mileage rates relating to charitable work, see Parker Tax ¶84,125.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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