IRS has released its standard mileage rates for the types of driving during 2023 that can affect taxes.

From today’s IRS news release:

Beginning on January 1, 2023, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 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.

These rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles.

While these actual deductions won’t be claimed for more than a year, when 2023 tax returns are filed, the rates are useful for current situations, such as employee reimbursements and charges to customers by some businesses.

These rates are supposed to be for all miles driven during 2023. However, as we saw earlier this year, if there are major changes up or down in the costs to operate vehicles (fuel being the most common), these rates might be modified mid-year.

A few weeks later than has usually been the case, IRS just today released its standard mileage rates for vehicle usage in 2020.  While these rates won’t be used on actual tax returns until more than a year from now, most businesses use the official IRS rates for charging customers and for reimbursing employees; so this is very relevant information for immediate use.

Beginning on January 1, 2020, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 57.5 cents per mile driven for business use, down one half of a cent from the rate for 2019,

• 17 cents per mile driven for medical or moving purposes, down three cents from the rate for 2019, and

• 14 cents per mile driven in service of charitable organizations.

IRS Press Release: IRS issues standard mileage rates for 2020

I long ago gave up on ever understanding why IRS and the tax writers in Congress believe that vehicles cost less to operate when used for charity, medical or moving.  Like many aspects of tax law, we just have to accept it as gospel because our Rulers in DC consider themselves to be so much wiser than we “normal” little people are.

IRS has released its official standard mileage deductions for 2019, and the business rate has been increased by 3.5 cents over the 2018 rate.  This is the largest year to year jump in a very long time. 

While these amounts aren’t going to be used on actual tax returns for more than a year, many businesses use the official IRS rate for billing customers and for reimbursing employees; so this advance notice is useful right now. 

The IRS Announcement: IRS issues standard mileage rates for 2019

Beginning on Jan. 1, 2019, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 58 cents per mile driven for business use, up 3.5 cents from the rate for 2018,
• 20 cents per mile driven for medical or moving purposes, up 2 cents from the rate for 2018, and
• 14 cents per mile driven in service of charitable organizations.

As we all get ready for the transition to living in the year 2018, IRS has released its official standard mileage deduction rates to be used on 2018 tax returns.  While the 2018 tax returns won’t be prepared until the 2019 Tax Season, these figures are more currently relevant since most businesses use the IRS rates for reimbursing their employees for business related trips in their personal vehicles.

From the IRS news release:

Beginning on Jan. 1, 2018, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 54.5 cents for every mile of business travel driven, up 1 cent from the rate for 2017.
• 18 cents per mile driven for medical or moving purposes, up 1 cent from the rate for 2017.
• 14 cents per mile driven in service of charitable organizations.

As always, I want to encourage everyone who uses their vehicles for business purposes to keep track of their actual expenses because they are frequently much higher than the IRS’s standard rate, especially for more expensive vehicles that get lousy gas mileage. 

This article on the AAA website shows their calculations of typical annual operating costs for different types of vehicles.  Using 15,000 miles per year, AAA came up with annual operating costs ranging from $6,354 (42.36 cents per mile) for small sedans to $10,054 (67.03 cents per mile) for pickup trucks.  

The recently lower fuel prices have caused IRS to reduce their standard rate per mile deductions for business, medical and moving in 2017.  Only Congress has the power to modify the per mile cost that can be claimed as a Schedule A Charitable Donation from the 14 cents per mile rate that they cemented into the Tax Code rather than allow it to fluctuate with current costs as calculated by IRS.

From the IRS press release:

Beginning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 53.5 cents per mile for business miles driven, down from 54 cents for 2016
• 17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016
• 14 cents per mile driven in service of charitable organizations

While these rates are for 2017 miles driven, to be claimed in 2018 when preparing 2017 1040s, having this info now is very useful for employers who use the IRS rate for their own employee reimbursement policies.

My Standard Reminders in regard to deducting vehicle expenses:

Most State tax agencies synchronize their allowable deductions with what IRS allows; but some don’t.

For heavy business use of vehicles, it’s a good idea to keep track of actual operating costs.  In many cases, it is possible to switch back and forth between standard rate and actual expenses from year to year. 

The IRS rate is based on average costs that may not represent your actual operating costs.  For example, if you are like many motorcyclists and owners of older cars, who use the much more expensive Ethanol Free gasoline to prevent the expensive carburetor problems that Ethanol causes, your fuel costs will be much higher than what IRS has built into their standard rate. 

IRS has released its standard mileage rates for 2016, down from the 2015 rates due to the lower fuel prices.  These are useful for employee reimbursement plans.

2016 Standard Mileage Rates for Business, Medical and Moving Announced

Beginning on Jan. 1, 2016, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 54 cents per mile for business miles driven, down from 57.5 cents for 2015
• 19 cents per mile driven for medical or moving purposes, down from 23 cents for 2015
• 14 cents per mile driven in service of charitable organizations