Just recently, the IRS has announced new standard mileage rates for using a car for business, charitable, medical, or transporting purposes. These rates will be effective for traveling starting Jan 1, 2022.
According to the rules, here are the mileage rates for each kind of travel criteria:
- Business Purposes – 58.5 cents per mile
- Medical Purposes – 18 cents per mile
- Moving Purposes – 18 cents per mile
- Charitable Purposes – 16 cents per mile
For business travel, the rate has increased by 2.5 cents per mile as compared to the rates of 2021. Similarly, the rate for medical and moving purposes has increased by 2 cents per mile in comparison to 2021.
This has come as a big boost for the tax payers, since they would be able to get more tax refund now. Increased standard mileage rate for 2022 means that employers will have to give more tax refund to their employees who are traveling by their own vehicles.
The reason for increase in these mileage rates is the increased fuel prices, insurance costs as well as the fuel economy.
In terms of business mileage, the same rate of 58.5 percent applies to all personal vehicles, that can include cars, trucks, and vans. The cost of gasoline, oil, tires, maintenance and repairs are all included in the mileage rates. Fixed costs including insurance, registration, and depreciation or lease payments, are also covered under the same.
However, the parking or toll tickets are not covered under the business mileage tax refund. Moreover, any personal use of the vehicle is not covered. Vehicle usage only for the business purpose is entitled for tax reimbursement.