Tell A/P and Payroll to update their records now: In a rare move that hasn’t happened in over a decade, IRS has just announced a midyear change to the standard mileage rate.
The cost of fuel has skyrocketed across the country due to numerous factors, including the war between Russia and Ukraine, along with rising rates of inflation.
As of June 9, 2022, the national average cost for a gallon of regular gasoline was $4.97, according to the AAA’s National Average Gas Prices tracker. And that prompted IRS to increase the mileage rate.
“The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices,” IRS Commissioner Chuck Rettig said in a news release. “We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses and others who use this rate.”
New mileage rates for 2022
So, for the remainder of the year, effective July 1, 2022, the standard business mileage rate will be 62.5 cents per mile, per Announcement 2022-13. This is an increase of four cents over the rate that went into effect Jan. 1, 2022.
There’s also a new mileage rate for moving expenses incurred by members of the military – it’s 22 cents a mile, also 4 cents more than the rate announced for the beginning of 2022. The same rate applies to deductible medical expenses.
Because the charitable mileage rate is set by law, it’ll remain unchanged at 14 cents per mile for charitable organizations.
IRS hasn’t made moves to change the mileage rate in the middle of the year since 2011. The new mileage rate takes into account increased fuel costs, as well as other costs associated with car maintenance, depreciation and insurance.
A/P and Payroll should note that the rate increase isn’t retroactive. So, for business travel occurring from Jan. 1, 2022, through June 30, 2022, the previous mileage rate of 58.5 cents per mile should be used for expense reimbursement. Moving expenses incurred by members of the armed forces during this time period should also be reimbursed at the old rate of 18 cents per mile. Be sure Finance keeps track of this carefully.