Attention drivers, the 2023 standard mileage rates are out. The IRS just announced the increased rates, which are used for determining the deduction for the costs of operating a vehicle for various business, charitable, moving, or medical reasons.

What are the changes for 2023?

Starting January 1, 2023, the standard mileage rates (for use of a car, van, pickup or panel truck) are:

• 65.5 cents for business miles driven (up from ­­­­­62.5 cents per mile for the last half of 2022). 28 cents will be treated as depreciation for 2023 (up from 26 cents per mile for 2022)

• 22 cents per mile driven for medical or moving purposes (no change from the midyear rate set for the second half of 2022). Make note that the moving expense deduction is repealed except for U.S. armed forces members on active duty who move pursuant to a military order or permanent change of station.

• ­14 cents per mile driven in service of charitable organizations (no change)

How are the rates calculated?

There are various factors that influence the standard mileage rates, including:

• Gas and oil prices

• Insurance costs

• The state of the economy

• The expected cost of typical wear and tear on a vehicle

Hence the rates are purposed to go over and above the amounts a consumer pays solely for gas.

Is the standard mileage rate the only way to gauge deductions?

No, taxpayers always have the option to claim deductions based on the actual costs of using a vehicle, as an alternative to using the standard mileage rates.

The new rates are effective as of January 1, 2023.

Questions on the standard mileage rates for 2023? Contact any member of our Tax Services Team.