On June 9, 2022, the Internal Revenue Service issued Announcement 2022-13, increasing the optional standard mileage rate for the final six months of 2022 from 58.5 cents per mile to 62.5 cents per mile. The new rate will be effective for traveling beginning on July 1, 2022, through December 31, 2022. The old rate of 58.5 cents per mile will remain in effective through June 30, 2022.
In the IRS' press release, IRS Commissioner Chuck Rettig noted: "The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices. We are aware a number of unusual factors 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 standard mileage rate is a national average rate, which takes into account a variety of factors including fuel costs, depreciation and insurance and other fixed and variable costs. The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu 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. Employers continue to have the option to use other methods that calculate the actual costs of using their vehicle rather than using the standard mileage rates.
Midyear increases in the optional mileage rates are uncommon, and last occurred in 2011. Employers should ensure that they properly account for the rate increase beginning July 1, 2022.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
