The Internal Revenue Service (“IRS”) allows taxpayers to deduct expenses related to the use of their personal vehicles (cars, trucks, vans, etc.) for business, medical, moving, and charity purposes. In addition, the IRS also allows employers to reimburse their employees for these expenses. To calculate these amounts, taxpayers and employers may either use (a) the actual expenses incurred through the use of the vehicle or (b) the standard mileage rates. Taxpayers cannot use both methods.
While using the actual expenses method may provide a more accurate representation of the expenses for the use of the vehicle, it can be time consuming and prone to error. Taxpayers have to keep track of the mileage used, receipts, and other expenses. The standard rate requires the taxpayer to track miles, but it does not require them to keep receipts. This article will primarily focus on the standard mileage rate.
Standard Mileage Rates.
On June 9, 2022, the IRS issued an announcement revising the standard mileage rates. The following table summarizes the changes:
|
Standard Mileage Rates for 2022 |
|||
| January 1 – June 30 | July 1 – December 31 | Change | |
| Business | 58.5¢ per mile | 62.5¢ per mile | 4¢ per mile |
| Medical | 18¢ per mile | 22¢ per mile | 4¢ per mile |
| Moving Expenses | 18¢ per mile | 22¢ per mile | 4¢ per mile |
| Charity | 14¢ per mile | 14¢ per mile | 0¢ per mile |
What is Deductible?
Business mileage is miles driven between two places of work. These can include driving between two different places of work, to client meetings or customer visits, or running business-related errands. Driving between work and home do not count as business mileage.
Medical mileage is deductible/reimbursable if the main purpose of the driving is for the purpose of obtaining medical care. This includes driving yourself, children, or someone else to the doctor, hospital or other medical facilities. In addition, parking fees and tolls are also deductible.
Charity mileage is deductible/reimbursable if the taxpayer uses his/her car to help a charity or drive somewhere to volunteer. Parking and tolls are also deductible.
Moving mileage is not deductible, unless the taxpayer is a member of the Armed Forces on active duty and is moving under orders to a permanent change of station.
Takeaways.
The IRS allows taxpayers to deduct travel expenses if they are business, medical, charity, or moving expenses. For all travel and/or transportation expenses incurred on or after July 1, 2022, the taxpayer must use the July 1 – December 31 mileage rates. However, if the transportation and/or travel expenses were incurred before July 1, 2022, the taxpayer must use the January 1 – June 30 rates. To deduct these expenses the taxpayer must itemize his/her expenses instead of using the standard deduction.