Taxes
What Are the IRS Standard Mileage Rates for 2023?
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The IRS announced the federal standard mileage rates for 2023:
- 65.5 cents per business mile, which is up 3 cents from the midyear increase setting the rate for the second half of 2022
- 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, consistent with the increased midyear rate set for the second half of 2022
- 14 cents per mile driven for charity, which is a flat rate set by statute and remains unchanged
How can you use the standard mileage rate for your taxes?
You can use the IRS mileage rate to calculate your mileage deduction. You simply keep a log of your business mileage for the year, then multiply your business miles by the business rate to come up with your deduction.
How does the IRS determine the mileage rate?
The IRS knows there’s a cost for running your vehicle for business and it lets taxpayers deduct a portion of that cost with the standard mileage rate.
The IRS determines the standard mileage rate based on fixed and variable costs of operating a vehicle for a year. The standard mileage rate includes costs like gasoline, wear-and-tear and depreciation.
Do I have to use the standard mileage rate for my auto deduction?
No, you can deduct the actual costs of running your business car using the actual expense method. This typically requires more record-keeping than the mileage deduction but can sometimes lead to a larger deduction.
Keep in mind, you cannot use the business standard mileage rate after you’ve used the actual expense method.
