Standard Mileage Rates for 2023
Starting on January 1, 2023, the following will be the standard mileage rates for using a car, van, pickup, or panel truck. These rates apply to cars that run on gasoline, diesel, electricity, or a combination of the three.
- 65.5 cents per mile driven for business use, up 3 cents from the midyear increase setting the rate for the second half of 2022.
- 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, consistent with the increased midyear rate set for the second half of 2022.
- 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.
The standard mileage rate for business use is based on an annual study of the fixed and variable costs of running a car. These costs include depreciation, insurance, repairs, tires, maintenance, gas, and oil. The rate for medical and moving costs is based on how much it costs to do those things.
Impact of the Tax Cuts and Jobs Act
Taxpayers cannot claim a miscellaneous itemized deduction for employee travel costs that aren’t covered by the company. Taxpayers cannot take a deduction for moving costs either, unless they are active-duty members of the military moving to a permanent change of station under orders.
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
Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.
Please contact the office if you have questions about standard mileage rates or which driving activities you should keep track of as the new tax year begins.
