Taxes

Federal IRS Mileage Rates for Business, Charity, and Medical

Marin Perez

The IRS Mileage Rates are important if you use a personal car for business, charity or medical travel. We've compiled the federal IRS mileage rates for the last few years.    

Federal IRS Mileage Rates for Business

The IRS announced the federal standard mileage rates for 2022:

  • The 2022 business mileage rate is 58.5 cents per business mile, which is up 2.5 cents from 2021
  • The IRS medical mileage is 18 cents per mile driven, which is up two cents from 2021
  • The standard mileage rate for charitable purposes is 14 cents per mile, which is flat from last year.
       

The federal IRS mileage rate is a way to compensate taxpayers for the expenses of operating their vehicles. It hasn't put the exact formula out but we know these rates include gas prices, oil costs, depreciation and wear and tear. The IRS typically leaves a single annual rate. But, as you can see, it changed in 2011 due to volatile gas prices.

Federal IRS Mileage Rate for Medical

Medical mileage plays into your medical expense deduction. You can deduct transportation costs for yourself, a spouse or a dependent. The transportation costs must be primarily for and essential to medical care.  

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Automatic, accurate mileage reports.

Federal IRS Mileage Rates Charity

The fixed mileage rate of 14 cents per mile for charitable purposes hasn't changed in a long time.  

How to Use IRS Mileage Rates for your Deductions

Using the standard mileage rate means calculating your deduction is quite simple. You multiply the amount of miles by the applicable rate to come up with your deduction.  

     
  • Drive 20,000 business miles in 2016, your mileage tax deduction would be $10,800 (20,000 x .54 = $10,800)  
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  • Drive 1,000 miles for medical purposes, your medical mileage deduction would be $190 (1,000 x .19 = $190)    
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  • Drive 1,500 miles for charity, your charity mileage deduction would be $210 (1,500 x .14 = $210)  
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Of course, the IRS doesn't just take your word for these miles. If you ever face an audit, you'll need an accurate mileage log. If you don't have one, the IRS can negate the deduction and add penalties on top of it.

IRS Mileage Reimbursement Rate

The official IRS mileage reimbursement rate is ... nothing. The IRS doesn't mandate businesses reimburse employees for company mileage. Many companies do this in order to attract and retain talent, though.    Many companies peg the reimbursement rate to the standard mileage rate. If your company pays lower than that, you may be eligible for a partial reimbursement. Of course, you're going to need an accurate mileage log to claim that.    

All data is taken from the IRS.

How to Claim Tax Deductions Using the Federal IRS Mileage Rate

To use the IRS mileage rate set by the IRS in your tax return, you should be using the standard mileage deduction method. To clarify, there are two ways to calculate your deductible miles: the standard mileage rate method and the actual expense method.

 

The actual expense method takes into account all of the costs involved in your car, including gas, repairs, maintenance, depreciation, parking fees, and insurance. It’s much more comprehensive, but also quite time-consuming since you need to track these individually.

In contrast, the standard mileage method only requires you to track your business mileage. You then simply multiply this amount by the rate set by the IRS.

For example, let’s say you’ve driven a total of 500 business miles in January 2021. The IRS rate for that year is 56 cents per mile. To calculate, multiply 500 miles by 56 cents to get a deduction of $280.

 However, not everyone can use the standard mileage deduction method (and therefore the IRS rates). You need to qualify for it first.

The first requirement is that you own or lease your vehicle. You also can’t operate more than four vehicles at a time, although switching between five or more cars is fine. Plus, you can’t apply for depreciation deductions or allowances, or have already done so in the past.

Once you qualify, you must use the standard mileage method in your first year of operating the car. If you own the car yourself, you can switch to the actual expense method later on. But if you’re leasing the vehicle, you have to stick with the standard mileage rate throughout the leasing period.

 

The Best Way to Track IRS Business Miles

Regardless of which method you use, it’s important that you track your vehicle’s mileage as accurately as possible. You might need to present it as proof of your mileage if the IRS asks for an audit.

The IRS outlines some guidelines on how best to track your miles. Your records should include the following details:

 

·   The date, purpose, and destination of each trip

·   Total miles driven for the year

·   Mileage for each business use

Furthermore, the IRS recommends that you record miles in a “timely” manner. This means doing so immediately after or close to the trip in question. This ensures that the data you enter is as close to reality as possible.

What should you use to record?

It can be as simple as using a notebook, trip diary, or spreadsheet kept in the glove compartment. Then on every trip, you simply log your details.

While simple, it’s easy to forget to log your trip. It’s also possible to misplace your records. A far better and elegant way is to use mileage tracking software. The biggest benefit is that the tracking is done automatically as you drive. This also means every mile is recorded for the best accuracy.

There are many solutions available, but one of the best is MileIQ. This mileage tracker app can accurately record your trip down to the last mile. Then, you can easily classify it as a personal or business trip with a simple swipe. There’s no need to manually do it yourself.

Download MileIQ to start tracking your drives

Automatic, accurate mileage reports.

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