The Internal Revenue Service has put a little more cushion into its standard mileage rates, so taxpayers won’t have such a big bite taken out of their pockets by fuel prices.
The rates for 2022, which take effect on January 1, will be used to figure the deductible cost of operating a vehicle for business, charitable, medical or moving purposes.
The 2022 standard mileage rates cover the use of a car as well as vans, pickups or panel trucks:
- 58.5 cents per mile driven for business use, up 2.5 cents from the rate for 2021,
- 18 cents per mile driven for medical, or moving purposes for qualified active-duty members of the Armed Forces, up 2 cents from the rate for 2021 and
- 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2021.
Business rates are based on an annual IRS study of the costs, both fixed and variable, of operating an automobile. The rates for medical purposes and moving purposes are both based on variable costs.
It’s a different deduction landscape
Taxpayers need to remember that what they can deduct from their taxes is a shorter list than it used to be. The Tax Cuts and Jobs Act, for example, also did away with the miscellaneous itemized deduction for unreimbursed employee expenses.
Also gone is the deduction for moving expense due to a new job. Now, that deduction is limited to active duty members of the Armed Forces who move under orders to a permanent change of station. See Moving Expenses for Members of the Armed Forces for more details.
The IRS reminds taxpayers that they can always opt to calculate the actual costs of using their vehicle, rather than using the standard mileage rates.
Taxpayers have to use the standard mileage rate in the first year their car is available for business use. After that, they can use either the standard mileage rate or actual expenses. If the vehicle is leased, however, they’re locked into the standard mileage rate for the entire lease period—including renewals—if that’s what the taxpayer chose at the beginning of the lease process.
The optional standard mileage rates and the maximum vehicle cost to figure the allowance under the Fixed and Variable Rate (FAVR) plan, are contained in Notice 22-03, which also contains other vehicle-related information.