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We are all feeling the pain at the pump and the IRS is responding by adjusting the 2022 mileage rate mid-year. A nice surprise in this time of extraordinary inflation!
“The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices,” said IRS Commissioner Chuck Rettig. “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.”
It’s not very fun pumping gas these days. The price of gas has doubled in a very short period of time.
The gas and wear and tear on a vehicle to make a simple trip to the hardware store, print shop, or neighborhood bakery add up for employees making a modest salary.
Employer Mileage Reimbursement
Many businesses reimburse employees for the use of personal vehicles for work-related travel to help cover the cost of these trips.
This benefit allows the employee to be reimbursed for work-related travel using personal vehicles.
Businesses use this standard mileage rate for calculating deductible costs associated with business automobile expenses.
For instance, a home care nurse travels from home to home to care for his/her patients. If this employee is using a personal vehicle, she may be eligible for mileage reimbursement.
Others can use the deduction for miles accumulated for charitable volunteer work, deductible moving expenses, or miles for approved medical care.
For instance, if you are transporting an aging parent to medical appointments, those miles on your vehicle may be deductible.
Mileage Rate for January through June 2022
Beginning on January 1, 2022, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be:
- 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 for business miles, as well as medical and moving rates, both increased a few cents per mile from the 2021 rate.
Employers reimburse business-related mileage for employees using their vehicles for company-related business.
The IRS recently announced slight changes to the 2022 Standard Mileage Rate.
The standard mileage rate increases go into effect on July 1, 2022.
New IRS Mileage Rates For 2022
- 62.5 cents for every mile of business travel driven – up 4 cents.
- 22 cents per mile driven for medical or moving purposes – up 4 cents.
- 14 cents per mile driven in service of charitable organizations – unchanged.
Mileage reimbursement can be applied to cars, vans, or pickup trucks.
Mileage logged for the first half of the year should use the January rates, and anything after July 1st should be calculated with new mileage rates.
How To Track Mileage
I’ve been around for a while and remember when mileage was manually recorded in logbooks that were kept in the vehicle.
A logbook method of tracking miles worked – to a point.
If an employee was in a hurry and forgot to log their miles, trying to go back and recalculate turned into a nightmare. We didn’t have GPS tracking on phones to do that quickly for us.
Today, technology helps a lot! There are countless ways to track mileage.
There are now mileage-tracking phone apps and countless technologies that help to track, monitor, and record vehicle mileage.
These new technologies also help with the unpleasant task of reporting mileage to employers.
Logbooks or technology tracking doesn’t matter. Find the best approach for your business and employee population.
You should also note that you may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.
Organizations that reimburse employee mileage should require employees to keep accurate records and submit a request for reimbursement on a regular basis.
Keep in mind with the new Tax Cuts and Jobs Act (TCJA), what you are able to deduct may have changed.
Consult your tax professional for questions regarding what your qualified deductions will be.
More information is available at IRS.gov.