Finance

IRS boosting mileage deduction as gas prices soar

Gas prices are displayed on a gas pump at an Exxon gas station in Washington, DC, on May 24, 2022. (Photo by Stefani Reynolds / AFP) (Photo by STEFANI REYNOLDS/AFP via Getty Images)

The IRS has announced that it will boost the optional standard mileage rate for the remaining months of this year.

An optional business standard mileage rate is used to compute the deductible costs of operating an automobile for businesses that track actual costs of operation. 

In a statement last week, the IRS said that the standard mileage rate will increase by four cents to 62.5 cents per mile starting July 1.

The mileage rate is also used by federal government agencies and other businesses that reimburse their employees for mileage, according to the statement. 

The deductible for medical or moving expenses for active military members will be at 22 cents for the remainder of this year, also up four cents from the beginning of this year. 

The agency also said that the mileage rate for charitable organizations will remain at 14 cents.

“The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices,” IRS Commissioner Charles Rettig said in a statement. “We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses and others who use this rate.” 

The move comes as gas prices continue to hit record highs across the country due to inflation and supply chain shortages caused by the ongoing conflict between Russia and Ukraine, according to CNBC. 

The agency noted that taxpayers will have the option to calculate the actual cost of using their vehicle rather than using the standard mileage rate.

Tags gas prices gas prices inflation rates Internal Revenue Service Internal Revenue Service Internal Revenue Service IRS Russia-Ukraine conflict
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