Employer Alert: IRS Mileage Rates Will Increase on July 1st

Ervin Cohen & Jessup LLP
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Ervin Cohen & Jessup LLP

Effective July 1, 2022, the mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes will increase. 

In a rare move,  the IRS made this special adjustment for the final months of 2022 in recognition of recent gasoline price increases.  The IRS normally updates the mileage rates once each year in the fall for the next calendar year.  The last time the IRS made such a midyear increase was in 2011. 

Specifically, the new standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 62.5 cents per mile driven for business use, up 4 cents from the rate effective at the start of 2022;
  • 22 cents per mile driven for medical, or moving purposes for active-duty members of the Armed Forces, up 4 cents from the rate effective at the start of 2022; and
  • 14 cents per mile driven in service of charitable organizations, unchanged from the start of 2022, as this rate is set by statute.

The rates are important because most employers use the standard rate for business as the reimbursement rate for employees who drive their vehicles in connection with performing work.  However, employers should note that, just like deductions for taxpayers, employees can opt to calculate their actual mileage expenses instead of using the IRS rate.

The author would like to gratefully acknowledge the assistance of Joanne Warriner.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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