This is how the IRS has changed the standard mileage rate for business, medical, travel or charity purposes for 2022.
What’s the standard mileage rate?
The Standard Mileage Rate is the IRS’s mileage rate used to calculate the deductible costs of operating a vehicle for business purposes. Mileage rates have fluctuated over the years. In 2017, the Standard Mileage Rate was 53.5 cents per mile. In 2016, it was 54 cents per mile. In 2015, it was 57.5 cents per mile.
The federal mileage rate for 2022
The business Standard Mileage Rate for the second half of 2022 is 62.5 cents per mile. The rate is calculated by using data from vehicle depreciation, fuel costs, and maintenance and repair expenses. The IRS sets the Standard Mileage Rate each year, although in 2022 there was a mid-year raise due to the soaring gas prices.
How to calculate mileage tax deduction
There are methods to calculate the mileage deduction: the federal standard mileage rate and the actual car expenses method. The actual expenses method is used to give detailed documentation of your vehicle expenses. The actual car expenses method lets you deduct actual vehicle expenses, such as depreciation, insurance, gas, and oil changes.
Easy calculation using the standard mileage rate
You can deduct mileage on your taxes using one of these methods. To calculate your deduction with the standard mileage rate, multiply your total miles driven by the IRS mileage rate that you’re using. For example, if you drove 2,500 miles in a month for business using the Standard Mileage Rate, you would deduct $1,563 (2,500 x 0.625) on your taxes.
Mileage Reimbursement
There are four types of mileage reimbursement:
- per diem,
- cost per mile,
- FAVR,
- and car allowance.
Per diem reimbursement covers a set amount of money per day for expenses like meals and lodging. Cost per mile reimbursement covers a set amount of money per mile driven. FAVR reimbursement covers a set amount of money per mile driven plus a daily allowance for expenses like meals and lodging. Car allowance reimburses employees a set monthly or annual amount to cover vehicle expenses.
Which mileage tracker app to use?
If you decide to use a cost-per-mile-based reimbursement technique, you’re going to need a mileage tracker app. For that, we strongly recommend trying MileageWise, which is a 100% IRS-approved mileage log app.
The advantages of MileageWise include its accuracy (less potential for human error), its ease of use (you can track your mileage without having to remember to write it down), and its affordability (there’s also a 14-day free trial period). Try out MileageWise today to make tracking your mileage easy.
