With inflation increasing the price of gas to record highs, the Internal Revenue Services have increased the mileage rate for remainder of 2022.
For the final six months of the 2022 tax year, the IRS have increased the standard milage rate to 62.5 cents per mile for business travel, up 4 cents from the rate effective at the start of the year.
For deductible medical or moving expenses (available for active-duty members of the military) the IRS have upped the rate to 22 cents for the remainder of 2022, which is a 4 cent increase from the rate effective at the start of 2022.
“The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices,” said IRS Commissioner Chuck Rettig in a press statement.
“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 IRS statement also said that the new rates will come into effect on July 1, 2022.
What is IRS Gas Reimbursement?
The new rates come on the heels of the ever-increasing gas prices brought on by a series of factors including former lockdown measures and the sanctions on Russia following the country’s invasion of Ukraine.
While fuel costs are the primary factor used to determine the mileage figure, other factors such as depreciation and insurance, and other fixed and variable costs, are also entered into the final calculation of mileage rates.
“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,” goes the official explanation.
“This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.”