The updated optional standard mileage rates for 2023 were released by the Internal Revenue Service.
While there was a midyear increase in June of 2022, the IRS decided to increase the rates again to compensate for inflation and high gas prices.
Effective Jan. 1, the new rates for cars, vans, pickups or panel trucks are:
- 65.5 cents per mile driven for business use, up 3 cents from the midyear increase setting the rate for the second half of 2022
- 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, consistent with the increased midyear rate set for the second half of 2022, and
- 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.
The rates help firms calculate the costs of operating gasoline, diesel-powered, electric and hybrid-electric vehicles for business, charitable, medical or moving purposes.
Taxpayers, however, can’t claim a miscellaneous itemized deduction for unreimbursed employee travel expenses under the Tax Cuts and Jobs Act. And to claim a deduction for moving expenses, taxpayers must be a member of the Armed Forces on active duty moving under orders to a permanent change of station.
People don’t have to use the standard mileage rates. They can calculate the cost of using their own vehicle. But typically, the first year the vehicle is available for business use they must use the standard mileage rates. Later on, they can use the standard mileage rates or actual expenses.
The exception to this is leased vehicles. If the standard mileage rate is selected, they must use it for the length of the lease.