Authored by RSM US LLP
On June 9, 2022, the IRS announced an optional increase to the standard mileage rate for the final half of 2022 (Announcement 2022-13). The IRS normally updates mileage rates once per year, in the fall for the upcoming calendar year; however, they chose to raise rates mid-year given the significant recent gasoline price increases.
The new rates go into effect on July 1, 2022. The standard mileage rate for business travel will increase 4 cents to 62.5 cents per mile. Medical or military moving mileage (must be active-duty member of the military) also increase 4 cents to 22 cents per mile. Charitable mileage reimbursement rates did not change and remain at 14 cents per mile.
The business standard mileage rate may be used to substantiate the deductible costs of operating an automobile for business use in lieu of tracking actual costs. Employers that reimburse employees’ travel expenses tax-free must not lose sight of other requirements for this treatment explained in Rev. Proc. 2019-46. The large shift in workforce dynamics over the past couple of years requires many employers to carefully review business travel arrangements for proper tax treatment. To learn more about tax issues regarding employee business travel, refer to this article.
Many employers looking to assist employees with rising costs will find this rate increase welcome, though possibly not enough to cover the drastic gas price increases. If an amount higher than the standard rate is paid, the additional amount is taxable income to employees.
This article was written by Anne Bushman and originally appeared on 2022-06-10.
2022 RSM US LLP. All rights reserved.
The information contained herein is general in nature and based on authorities that are subject to change. RSM US LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM US LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.
RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/aboutus for more information regarding RSM US LLP and RSM International. The RSM(tm) brandmark is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.