IRS increases standard mileage rate for 2023
Employees are facing rising gas prices and an increased cost of living across the country. To help combat this, the Internal Revenue Services (IRS) has increased the standard mileage rate for 2023. Let\’s take a look at what the new rates for 2023 are.
IRS mileage rate for 2023
On December 29th, The IRS has issued the mileage rate for 2023. These optional standard mileage rates are used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes.
Beginning on January 1, 2023, the standard mileage rates for the use of an automobile will be:
- 65.5 cents per mile driven for business use.
- 22 cents per mile driven for medical, or moving purposes for qualified active-duty members of the Armed Forces.
- 14 cents per mile driven in service of charitable organizations.
In June of 2022, the IRS implemented a midyear increase. The increase set the mileage rate at 62.5 cents per mile for the remainder of 2022. The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. Additionally, the rate for medical and moving purposes is based on the variable costs.
What is the mileage rate used for?
The standard mileage rate is used to compute the costs that are deductible by businesses and self-employed individuals for operating an automobile for business use, as an alternative to tracking actual costs. Employers can use the standard mileage rate to pay tax-free reimbursements to employees who use their own vehicles for business.