IRS Increases 2022 Standard Mileage Tax Deduction Rates to Cover Higher Gas Prices

The Internal Revenue Service today announced standard mileage rates for 2022 that taxpayers can use to calculate deductible costs of using a car for business, charitable, medical, or moving purposes. This means tax savings if you are self-employed and drive your own car for business, and possibly more money in your pocket if your employer reimburses you for miles driven.

In Notice 22-03, the IRS lists standard mileage rates, as of January 1, 2022:

Commercial use: 58.5 cents per mile in 2022, up 2.5 cents from 56 cents per mile in 2021

Medical use: 18 cents per mile in 2022, up from 16 cents per mile in 2021

Mobile usage: 18 cents per mile in 2022, up from 16 cents per mile in 2021

Charitable use: 14 cents per mile, for 2021 and 2022

You will use the 2022 rates on your 2022 tax return. And the 2021 rates on your 2021 tax return due April 15, 2022. If you’re curious, the IRS keeps track of historical mileage rates for the past decade . Standard rates for commercial purposes hit new high; standard rates for medical and moving purposes were 20 cents per mile in 2019. Fares have jumped this year due to rising fuel prices and higher car costs.

The rate for charitable miles flown has been set by Congress at 14 cents per mile since 1997, but other rates are adjusted annually. The business rate adjustment takes into account all the costs associated with owning a car, including insurance and repairs, while the other adjustment primarily takes into account the costs of oil and gas.

Standard rates are the easiest option for taxpayers to use. You multiply the miles flown by the rate. Another option is to claim deductions based on the actual costs of using a vehicle. In either case, you need to keep records to prove how far, when, and for what purpose.

The higher standard rates mainly help workers whose employers reimburse them for kilometers driven and the self-employed who drive their own cars for work purposes. Employers are not required to use the rate granted by the IRS for reimbursement purposes, but they often do so because it sets the level of tax exemption for employees, so there is no tax return for the employee.

If your employer doesn’t reimburse you, you’re out of luck. Unreimbursed employee travel expenses are not deductible. This is because the Tax Cuts and Employment Act 2017 removed the itemized deduction for unreimbursed employee travel expenses for the 2018 to 2025 tax years.

If you are self-employed, you will report your mileage as a business expense on Schedule C. You cannot use the standard mileage rate for a vehicle after you have claimed accelerated depreciation, including the deduction for transportation expenses. article 179, on this vehicle.

Don’t underestimate charity and medical breaks. If you itemize the deductions, miles driven to volunteer count, let’s say you drive to volunteer at a local animal shelter twice a week or deliver meals for a charity to elderly people confined to the House. If you have large health care bills, medical miles can help you meet the threshold to claim a medical expense deduction. You get a deduction to the extent that medical expenses, including mileage, exceed 7.5% of your adjusted gross income. The deduction for kilometers traveled is limited to active military personnel.

There are more savings if you keep good records: Parking costs and tolls for business, charity, medical, and moving travel are also deductible.

Further reading:

New higher inheritance and gift tax limits for 2022

IRS announces 2022 tax rates, standard deduction amounts, etc.

Medicare Part B premiums increase 14.5% in 2022

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