In June of this year, the IRS announced the optional standard mileage rate increase to be used during the last six months of 2022. Mileage is the rate you can use to calculate the total deductible costs of operating a vehicle for business purposes.
One of the reasons for the increase is the high cost of gasoline that the country has experienced recently. The growth maintains a collective concern about the value those who work with their vehicles must add to their services.
Mileage increase for the last months of 2022
Since the 2022 – 13PDF announcement offered on June 9 this year, the standard mileage rate went from 58.5 cents per mile to 62.5 cents per mile. The deductible medical or moving expenses rate also increased from 18 cents to 22 cents.
All rates became effective July 1 and will remain effective until December 31, 2022. However, the millage rate for charitable contributions remains at 14 cents by U.S. Code 26.
The announcement created bewilderment in the community because it is a change that is usually made only at the beginning of each year; however, by 2022, taxpayers will have to make adjustments to avoid legal problems.
The main reason for this increase is the mismatch between the supply and demand of petroleum products.
How standard mileage rates work
The optional standard mileage rates imposed by the IRS are prescribed by IRS Revenue Procedure 2019 – 46. The process outlines the rules for deducting the costs of operating a vehicle for charitable, moving, medical or business expenses.
It is not an obligation to use these rates; instead, they can be adjusted to the actual costs of driving the car for an acceptable reason. The IRS calculates the rates yearly by considering the average price of vehicle maintenance per mile.
The reasons for the increase
As mentioned above, one of the most relevant and understandable reasons for the increase is the notorious increase in gasoline in the last few months, which causes an increase in the common maintenance of a vehicle.
Today, the gasoline cost is approximately $5.00 per gallon due to the mismatch between supply and demand. According to AARP, there are four main causes for this variation:
- Extreme weather caused by the annual tornado and hurricane damage
- Supply disruptions due to the war in Ukraine
- Significant increase in summer travel
- More expensive summer gasoline blends
There are other regional and national issues. However, the above are the most relevant causes of fuel increases.
What is mileage reimbursement?
Mileage reimbursement is the reimbursement you receive for using a personal vehicle for business purposes; it is intended to cover the costs of owning and driving the car for the miles deemed necessary. To qualify for this reimbursement, you must have a specific and functional vehicle for business use.
Generally, the reimbursement is calculated per-mile basis and will cover all costs of owning and operating your automobile for business purposes. Business mileage is any mileage between two work locations, temporary or permanent.
Mileage may be for a trip between two different workplaces, a business-related errand, or a meeting or visit to customers or their workplaces.