IRS Increases Standard Mileage Rate
for the Second Half of 2022
Starting July 1 of 2022, the IRS announced that they’re going to increase the standard mileage rate for automobile tax reimbursement. The new rates will require taxpayers to keep two separate logbooks - one for mileage driven on the old mileage rates, and another one for new mileage after July. How are company owners supposed to deal with this issue?
What are standard mileage rates?
Taxpayers that want to file for mileage tax reimbursement have to use an IRS-established rate in cents per mile for calculating their returns. The standard mileage rates are optional and taxpayers need to manually compute and apply for the return in order to receive it. The standard mileage rates are split into business expenses, medical expenses, and charity expenses.
For 2022, up until July 1, the rates were at 58.5 cents for each business mile, 18 cents for miles driven for medical purposes, and 14 cents for charity miles. However, as gasoline was getting more and more expensive, mileage reimbursement remained at the same cost per mile. The situation will slightly improve starting in July, together with increases announced by the IRS.
New standard mileage rates for 2022
The federal mileage rate was increased to adjust for the rising gas prices and inflation. The change will take place on July 1, 2022, and the new mileage rates will look as follows:
- 62.5 cents per mile for all business expenses (a 4-cent increase per mile)
- 22 cents per mile for all medical and moving expenses (a 4-cent increase per mile)
- The standard mileage rate for charity expenses remains the same at 14 cents per mile
The new mileage rate was established to ease the pressure of the increased fuel prices. Even though the increase might not be substantial, every cent counts in the volatile world we live in today. Gasoline prices remain extremely unstable and on the rise, which makes this small change meaningful for companies in the long term.
How to track mileage under the new rates
Even though beneficial for taxpayers, the new standard mileage rates can complicate bookkeeping for many companies - for the year 2022, mileage logs will have to be kept separately for routes before and after July 1. For company owners who still use handwritten logbooks or Excel files, a mileage tracker app can be a much more efficient solution.
Mileage tracking apps like MileageWise offer a modern solution to maintaining a mileage log for tax return purposes, accessible from your smartphone. Using the right app, companies receive an average mileage tax deduction of $12,000 per year, per vehicle.
MileageWise is powered by innovative AI-powered technology that can help recreate forgotten past mileage, based on previous journeys and clients’ locations. The app can also produce an IRS-compliant mileage log, with smart error checking to verify your logs to rule out 70 common logical errors that might cause issues in case of an IRS audit.
Using MileageWise, you can keep track of the old and new mileage rates automatically, with 4 tracking modes to choose from.
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