The IRS usually sets the standard mileage rates for business, medical, and charitable activities at the beginning of each calendar year. However, on June 9, 2022, the IRS, for the third time since 2008, announced an increase effective July 1, 2022 for the remainder of the year.
At that time, the standard mileage rate for business expenses will be 62.5 cents per mile, an increase of 4 cents from the 58.5 cents per mile rate in effect between Jan. 1, 2022, and June 30, 2022.
The medical mileage rate increased by 4 cents to 22 cents per mile. This increase to 22 cents per mile also applies to moving expenses, however this deduction only applies to members of the U.S. armed forces on active duty and is subject to additional restrictions.
The IRS mileage rate takes into account not only the cost of fuel but other costs such as depreciation, insurance, and other fixed and variable costs. Taxpayers usually have the option of using the actual costs of operating a vehicle instead of the mileage rate.
All taxpayers who plan on using the mileage deduction need to maintain proper documentation. One of the best ways to do this is a vehicle log that documents each vehicle's use, the date, trip purpose, and odometer readings related to the activity as well as a record of all actual costs of vehicle operation including fuel, repairs, maintenance, and insurance. There are several mobile applications that taxpayers can use to track vehicle use as well. These apps generate a digital log of vehicle use.