IRS mileage rate is increasing, effective July 1

[Leo Enticknap]

Thought I'd mention this, just in case anyone who either claims work mileage from their employer at the IRS rate, or is self-employed and claims mileage on their tax return, missed it. I'm guessing that most of the USA field techs on F-T do one or the other.

IRS Press Release:

IR-2022-124, June 9, 2022

WASHINGTON — The Internal Revenue Service today announced an increase in the optional standard mileage rate for the final 6 months of 2022. Taxpayers may use the optional standard mileage rates to calculate the deductible costs of operating an automobile for business and certain other purposes.

For the final 6 months of 2022, the standard mileage rate for business travel will be 62.5 cents per mile, up 4 cents from the rate effective at the start of the year. The new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents for the remainder of 2022, up 4 cents from the rate effective at the start of 2022. These new rates become effective July 1, 2022. The IRS provided legal guidance on the new rates in Announcement 2022-13PDF, issued today.

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2022. The IRS normally updates the mileage rates once a year in the fall for the next calendar year. For travel from January 1 through June 30, 2022, taxpayers should use the rates set forth in Notice 2022-03PDF.

"The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices," said IRS Commissioner Chuck Rettig. "We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses and others who use this rate.”

While fuel costs are a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

The 14 cents per mile rate for charitable organizations remains unchanged as it is set by statute.

Midyear increases in the optional mileage rates are rare, the last time the IRS made such an increase was in 2011.

Unless you drive a very fuel efficient car, the extra $0.04 a mile is unlikely to absorb all of the extra gas cost (at least, not in California), but it's better than nothing.

[Marcel Birgelen]

Yeah, and way better than the EUR 0.19 per kilometer or about EUR 0,30 per mile we can deduct around here.

Meanwhile, the average price per liter fuel (EURO 95, which is 95 RON and the lowest quality you can get at the pump): EUR 2.499, or about EUR 9,46 per gallon...

[Leo Enticknap]

95 RON is roughly 89 AKI (the scale used to measure road gasoline grades in the USA), which is regular grade here, too.

They offered tax relief on work mileage that was significantly less than what it actually cost to operate a vehicle in the UK, too, I suspect in an attempt to discourage car use. IIRC, it was GBP 0.40 a mile when I left. The silly thing is that the cost simply ends up being passed along to customers eventually, but of course the government doesn't mind, as it receives double taxation on the difference (both on the non-relieved part of the vehicle use cost, and on the goods and services that are eventually delivered by using the vehicle).

[Mark Gulbrandsen]

In many western States they grade starts at 85, goes to 89, then to 92. Here in Nashville, it starts at 87, then to 91 and then 93. Then there is ethanol free gas that's called Pure Gas. People with Benz's and BMW's generally use that gas. Pure gas has a phone app showing their locations country wide. BMW also recommends 93 octane Shell gas.

[Harold Hallikainen]

https://www.irs.gov/newsroom/irs-inc...ainder-of-2022

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

[Marcel Birgelen]

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

I didn't read into the laws and regulations applicable in the U.S., but over here, those EUR 0.19 per KM is the maximum you can reimburse any employee for the use of their vehicle, without it being seen as income. If you reimburse any employee more than that amount, that's seen as income and is therefore subject to taxation as normal income.

Like Leo indicated, if you're using your private car, you already paid your taxes, both on your car and on the fuel that makes it go somewhere. So, essentially, if your employer is compensating you for the real cost of driving that vehicle, you're essentially being double-taxed for at least part of it... but hey, like governments really care about that...

I guess that's the same situation over in the U.S., only is the deductible amount per KM or mile much higher, so the "damage done" is probably less.

[Leo Enticknap]

but over here, those EUR 0.19 per KM is the maximum you can reimburse any employee for the use of their vehicle, without it being seen as income. If you reimburse any employee more than that amount, that's seen as income and is therefore subject to taxation as normal income.

Same deal here. If a particularly generous employer were to offer to reimburse in the form of mileage above the IRS rate, the extra would be taxable income, unless on the basis of "calculate the actual costs." That would be a complicated sum (factoring in depreciation on the car, insurance, maintenance, licensing/registration fees, and fuel), which of few could be bothered to do.

In many western States they grade starts at 85, goes to 89, then to 92. Here in Nashville, it starts at 87, then to 91 and then 93.

And I misremembered California: the three grades here are actually 87, 89, and 91.

In December 2020 I drove to El Paso for an install (needed to take so much stuff, much of which the TSA wouldn't have liked, that the 13-hour road trip each way made sense), and noticed when I was there that the regular grade was lower than in SoCal - likely 86 or 85. I asked at the first gas station I filled up at if that would be OK in my car (a 2018 Honda HR-V), given that it is usually filled with 87, and she said that it probably would, but suggested that I fill up with mid grade, to be on the safe side. As the gas in Texas was ridiculously cheap compared to what I was used to, I did so with barely a second thought.