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IRS Issues Standard Mileage Deduction Rates for 2023; Business Use Increases 3 cents Per Mile

Monumental - As the year was ending and everyone was preparing to bring in the New Year, the Internal Revenue Service (IRS) released the updated rates for 2023 in regards to standard mileage rates used to calculate the deductible costs of operating and automobile for business, charitable, medical, or moving purposes.


Set to begin on January 1, 2023, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be:

  • 65.5 cents per mile driven for business use, up 3 cents from the midyear increase setting the rate for the second half of 2022.

  • 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, consistent with the increased midyear rate set for the second half of 2022.

  • 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.

These rates will also apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles.


The standard rates released were a result of an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.


Important: Under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. For more details please see Moving Expenses for Members of the Armed Forces.


Taxpayers will also have the option to calculate the actual costs of operating their vehicle rather than using the standard mileage rates.


These increases in rates should help offset some of the brutal inflation that taxpayers saw in the year 2022. The IRS has also announced the tax filing date is January 24 and strongly encourages to use online resources before calling. Last filing season the IRS received more than 145 million calls between January 1 - May 17, more than four times the calls than in an average year. This substantial increase was the result of Covid-era changes made at the IRS.



 

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This article does not and should not be taken as legal or accounting advise. Should you need professional services on this topic please call us or a service provider of your choosing.



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