The IRS announced last week that its standard mileage rate will increase to 65-cents per mile, up three cents from the prior rate, effective January 1, 2023.
Individuals and companies can use this new rate when operating a vehicle for business, medical, charitable, or moving purposes if you are an active-duty military member. The rate, however, is different depending on your use:
- Business: 65.5 cents
- Medical or Moving: 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces
- Charitable: 14 cents per mile (unchanged).
The IRS states the rates applies to diesel, gasoline, electric and hybrid-electric cars. Cars include vans, pickups and panel-trucks.
IRS Mileage Details
It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. For more details, see Moving Expenses for Members of the Armed Forces.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Taxpayers can use the standard mileage rate, but generally must opt to use it in the first year the car is available for business use. Then, in later years, they can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is decided.
Notice 2023-03 contains the optional 2023 standard mileage rates, as well as the maximum automobile cost used to calculate the allowance under a fixed and variable rate (FAVR) plan. In addition, the notice provides the maximum fair market value of employer-provided automobiles first made available to employees for personal use in calendar year 2023 for which employers may use the fleet-average valuation rule in or the vehicle cents-per-mile valuation rule.
