IRS Raises Mileage Rates in Two Categories

Currently, inflation is on almost everyone’s mind. Just as goods and services have increased in price, so have the 2022 optional standard mileage rates. The Internal Revenue Service (IRS) recently raised the rates used to calculate deductible costs of operating an automobile for business, charitable, medical, or moving purposes in two categories.

Beginning January 1, 2022, standard mileage rates for car usage (including vans, pickups, or panel trucks) will be:

  • 58.5 cents per mile driven for business use. This is an increase of 2.5 cents from the 2021 rate.
  • 18 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces. This is an increase of 2 cents from the 2021 rate.
  • 14 cents per mile driven in service of charitable organizations. This rate is set by statute and remains unchanged from the 2021 rate.

These rates are based on an annual study of the fixed and variable costs for operating an automobile. The rate for medical and moving purposes is based on the variable costs. Rather than use the standard mileage rates, taxpayers may also calculate the actual costs of using their vehicle.

During the first year the car is available for business use, taxpayers must use the standard mileage rate. In later years, they can choose either the standard mileage rate or the actual expenses. If the standard mileage rate is chosen at the beginning of the lease, leased vehicles will be required to use the standard mileage rate method for the entire period of the lease.

For questions regarding standard mileage rates, contact your Adams Brown advisor today.