The IRS has announced a 3 cent per mile increase in the optional standard mileage rate effective on January 1, 2023. These rates can be used to calculate the deduction for the use of a vehicle for business travel or for medical and moving expenses as an alternative to tracking the actual costs of operating a vehicle such as depreciation, insurance, repairs, gas, etc. This rate is also used by businesses and the federal government to determine mileage allowances for their employees.
The rate for business travel has been increased to 65.5 cents per mile. The rate for medical/moving expenses will continue to be 22 cents per mile and the mileage rate for charitable purposes remains at 14 cents per mile. Due to the Tax Cuts and Jobs Act in 2017, the rates cannot be used to claim an itemized deduction for unreimbursed employee travel expenses and moving expenses can only be claimed by certain active-duty members of the Armed Forces.
The prior standard rates of 58.5 cents per mile for business travel, and 18 cents per mile for medical and moving must be used for expenses and milage allowances paid or incurred from the beginning of the year through 6/30/2022. For travel from 7/1/2022 through the end of 2022, the mileage rate is 62.5 cents per mile for business and 22 cents per mile for medical/moving expenses. For further information, please refer to IRS Notice 2023-03.