If you’re self-employed or own a small business, you may soon be eligible for a little relief from soaring gas prices.
The Internal Revenue Service (IRS) has advised that there is an increase in the optional standard mileage rate for the final 6 months of 2022. IRS Commissioner, Chuck Rettig, said: "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.”
What has changed?
- 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.
- Midyear increases in the optional mileage rates are rare, the last time the IRS made such an increase was in 2011.
- The IRS normally updates the mileage rates once a year in the fall, for the next calendar year.
To claim the deduction, keep good driving records
While it’s always important to track mileage, including travel dates, it will now be even more critical to make sure the correct rates apply to each trip.
According to the IRS, the standard mileage rate isn’t mandatory. Taxpayers also have the option to calculate actual costs, which involves deducting a percentage of the vehicles’ total expenses. But either way, you’ll need to maintain detailed record-keeping.
How TaxAssist Advisors can help
Speak to your local TaxAssist Advisor to make the most of tax saving opportunities.
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.
TaxAssist offers an expert professional advisory service. Inquire online here to book your free, no obligation consultation.
Date published Jun 16, 2022 | Last updated Jul 22, 2022
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