For the final six months of 2022, the Internal Revenue Service announced an increase in the optional standard mileage rate. Optional standard mileage rates can be used to calculate the deductible costs of using a car for business and certain other activities. The normal mileage rate for business travel will be 62.5 cents per mile in the final six months of 2022, up 4 cents from the rate in place at the start of the year. The revised prices will go into effect on July 1, 2022.
The IRS made this special adjustment for the last six months of 2022 in acknowledgment of recent fuel price hikes. The IRS is changing the regular mileage rates to better reflect the recent increase in fuel prices. The IRS is aware that a variety of exceptional issues relating to gasoline costs have come into play, and they are taking this extraordinary action to assist taxpayers, businesses, and others that utilize this rate.
While fuel prices play an important role in mileage calculations, other factors such as depreciation, insurance, and other fixed and variable costs also play a role. Instead of recording actual costs, the optional business standard mileage rate is used to calculate the deductible costs of driving an automobile for business purposes. The federal government and many businesses use this rate as a baseline for calculating mileage reimbursements for their employees.
Rather than using the regular mileage rates, taxpayers can always calculate the actual expenditures of driving their vehicle.