The Internal Revenue Service adjusts the standard mileage rates for federal taxes every year against inflation and changes to the cost of living. The updates are announced at the end of every year for the following year.
Although the changes are very minor – about one or two cents up or down, it makes a significant difference when you log thousands of miles over the tax year. Even if you don’t, you must keep up with them as you’ll need to enter the amounts on the corresponding tax form(s), Form 2106, for example.
Here is everything you need to know about the mileage rates, including how to claim this deduction for your business expenses, medical/moving, or in service of a charitable organization.
Business mileage rate: 58.5 cents per mile
For the 2022 taxes, the mileage rate is 58.5 cents per mile driven. This means you get to deduct 58.5 cents for every mile driven from the taxes you will file in 2023.
Claiming this deduction is fairly simple and straightforward – multiply the number of qualifying miles driven by the standard mileage rate of 58.5 cents. You can then figure out the dollar amount by dividing the result by 100. For example, for 100 miles driven, you get to deduct 5.850 cents, racking up $58.5.
The tax form to use for this deduction is Form 2106. Remember that this is an itemized deduction, so you have to skip the standard deduction in 2023. Otherwise, you can’t claim it.
Medical and moving mileage rate: 18 cents per mile
When you commute for a medical reason, such as going to a hospital for a check-up or appointment, the commuting costs are deductible. Again, the same as business mileage deduction, you will need to multiply the number of qualifying miles driven by the mileage rate. This time, however, multiply it with 18, as it is the set rate for this purpose.
For moving expenses, things get a bit tricky. Not every taxpayer qualifies for this deduction. Only those who are serving in the US Armed Forces can deduct their moving expenses through the mileage deduction. Even then, simply moving your house to somewhere else doesn’t make you eligible.
Those serving in the military can deduct their moving expenses when there is a change in permanent change of station. That said, simply changing houses don’t make you qualify for this deduction. This deduction is very broad and doesn’t only cover the mileage expenses. You also get to claim storage costs and more.
Still, just like the above, calculating it is the same. Take the number of qualifying miles driven and multiply it by 18.
Charity mileage rate: 14 cents per mile
This amount doesn’t change every year, unlike the other two. Congress fixed this rate, and the Internal Revenue Service doesn’t adjust it anymore – until further changes happen, of course.
Follow the same calculation method and report the deductible amount on Schedule A, Itemized Deductions for your 2022 tax return.
Deducting the actual expenses
Simply driving your vehicle and getting a deduction for it doesn’t always end up at a fair amount. That’s why you also have the option to deduct the actual expenses rather than going the mileage route.
Instead of claiming the mileage deduction per every qualifying mile driven, deduct your actual expenses using Form 4562, Actual Expenses and Depreciation.
Even if the standard mileage deduction gets you a great deduction, you should always calculate the actual expenses. It’s very similar to calculating itemized deductions and comparing them with the standard deduction amount you get for that tax year. Calculate both deductions and claim the one that reduces your taxable income the most.