• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Corporate Tax Return Prep

Corporate Tax Return Prep

Let Us Handle Your Corporate Taxes

Call us: 781-849-7200
contactus@worthtax.com

  • Home
  • Corporations
  • S-Corps
  • Partnerships & LLCs
  • Business Planning
  • IRS Tax Problems?
  • Why Worthtax?
  • Our Tax Team
  • Tax Guide
  • Secure Client Portal
  • Blog
  • Resources
  • Locations and Hours
  • Schedule an Online Appointment

IRS Announces Mid-Year Optional Vehicle Mileage Rate Increase

July 13, 2022 by Alex Franch, BS EA

Mid-Year Optional Vehicle Mileage Rate

With gas prices soaring it has been expected the IRS would increase the mileage rate that business owners can deduct for vehicle use instead of keeping a record of actual expenses. Sure enough, the IRS recently announced a 4-cent increase in the optional mileage rate for the last half of 2022.

The new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents for the last 6 months of 2022, also up 4 cents from the rate effective at the start of 2022. These new rates become effective July 1, 2022.

Optional Mileage Rate for 2022
Purpose 1/1 through 6/30/22 7/1 through 12/31/22
Business 58.5¢ 62.5¢
Medical/Moving 18¢ 22¢
Charitable 14¢ 14¢

The standard mileage rate for businesses is based on a study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. The rate for using an automobile while performing services for a charitable organization is statutorily set and has been 14 cents for over 20 years.

The standard mileage rate is determined annually by the IRS using data from a study conducted by an independent contractor of vehicle-operating expenses based on the prior year’s costs. The rate includes:

  • Gas,
  • Oil,
  • Lubrication,
  • Maintenance and Repairs,
  • Vehicle registration fees,
  • Insurance, and
  • Straight-line depreciation.

Not included in the standard rate, and deductible in addition to the optional rate, are:

  • Parking,
  • Tolls, and
  • State and local property taxes attributable to business use.

Sales tax paid when the vehicle is purchased must be capitalized into the business basis of the vehicle, so it isn’t separately deductible.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates, which may produce a better result considering the skyrocketing fuel prices. Taxpayers can also switch from using the optional mileage rate in one year to actual expenses using straight-line depreciation in the next year.

Please give this office a call if you have questions about the new rates or related to switching methods or which method you should use when putting a vehicle into service.

  • Facebook
  • Twitter
  • Buffer
  • Evernote
  • AOL
  • Gmail
  • Print Friendly
  • Yahoo Mail
  • LinkedIn
  • StumbleUpon
  • Tumblr

Filed Under: Tax Changes Tagged With: announcements, Vehicle Mileage Rate Increase

About Alex Franch, BS EA

Ready to get started on your corporate taxes?

781-849-7200      Email

Schedule an Online Appointment      Upload Files to Our Secure Client Portal

Primary Sidebar

  • Home
  • Corporations
  • S-Corps
  • Partnerships & LLCs
  • Business Planning
  • IRS Tax Problems?
  • Why Worthtax?
  • Our Tax Team
  • Tax Guide
  • Secure Client Portal
  • Blog
  • Resources
  • Locations and Hours
  • Schedule an Online Appointment

Calculate Your Estimated Tax Responsibility

tax calculator, calculate your taxes

RSS Recent Posts

  • If Your Business is a Delaware Corporation, There Are Important Upcoming Tax Deadlines to Be Aware Of
  • How Shopify Upended the eCommerce Sector in the Best Possible Way
  • March 2023 Business Due Dates
  • Planning On Buying a New Electric Vehicle and Claiming a Tax Credit? Better Read This First
  • What You Need to Know About Converting an S Corp to a C Corp
  • Consequences of Filing Married Filing Separate
  • 2023 Standard Mileage Rates Announced
  • February 2023 Business Due Dates
  • Understanding Tax-Deferred Investing
  • How the FTX Crypto Bankruptcy Was Born From a Complete Lack of Accounting Controls

Get started now on your corporate taxes.

     781-849-7200      

            Email            

   Online Appointment  

Upload Files to Our
Secure Client Portal Here
Receive a Free Subscription to Our Newsletter

© Copyright 2023 Worthtax · All Rights Reserved