The IRS has announced a midyear increase in the standard mileage rates for business and medical use of an automobile, and for deducting moving expenses. For travel on or after July 1, 2022, the business standard mileage rate is 62.5 cents per mile (up from the original 2022 rate of 58.5 cents per mile). The rate when an automobile is used to obtain medical care is 22 cents per mile for travel on or after July 1, 2022 (up from 18 cents per mile). The rate for deducting automobile expenses that are moving expenses will also increase from 18 to 22 cents per mile for travel on or after July 1, 2022. For taxable years beginning after 2018 and before 2026, however, the moving expense deduction is available only for certain moves by members of the Armed Forces on active duty. The rate for charitable use of an automobile will remain unchanged at 14 cents per mile.

Standard mileage rates can be used instead of calculating the actual expenses that are deductible. For example, the business standard mileage rate can be used instead of determining the amount of fixed expenses (e.g., depreciation, lease payments, and license and registration fees) and variable expenses (e.g., gas and oil) that are deductible as business expenses. Only variable expenses are deductible as medical or moving expenses, so the medical and moving rate is lower. (Parking fees and tolls related to use of an automobile for medical or moving expense purposes may be deductible as separate items.) 

EBIA Comment: Ordinarily, the IRS updates mileage rates only once a year, but occasionally it makes interim adjustments like this one, which reflects recent gasoline price increases. Transportation expenses that are deductible medical expenses generally can be reimbursed on a tax-free basis by a health FSA, HRA, or HSA. (To simplify administration, some employers’ health FSAs or HRAs exclude medical transportation expenses from the list of reimbursable items.)

Source: Thomson Reuters

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