Timely changes to mileage deduction rates announced by IRS
Everyone knows the price of gas is going up fast, and that affects the price of nearly everything. There is one bright spot, though – the IRS has increased the amount you can deduct per mile if you use your car for business in the second half of 2022.
From July 1, 2022 through December 31, 2022, you can deduct 62.5 cents for each mile you drive, up from 58.5 cents for the first half. This reflects the increase in the cost of gasoline, although the mileage deduction also takes into account other costs associated with driving, like insurance, depreciation and wear and tear on your vehicle.
Note that the change is for the second half of the year only, so you’ll need to keep accurate records of your mileage by month.
Typically, the IRS sets the mileage deduction rate in the fall for the upcoming year, and it remains the same all year long. The last time the IRS made a mid-year adjustment to the rate was 2011.
If you reimburse mileage expenses for your employees, you may want to use the new mileage rate when compensating them for their driving expenses.
You can also use the actual cost of operating your vehicle for business as a deduction, instead of the mileage deduction. but that typically requires more record-keeping.