How to Claim Mileage Tax Deduction & 2022 IRS Rules | MileIQ

What are the standard mileage tax deduction rates & rules?

You can use the mileage tax deduction to offset the cost of using a personal vehicle for business reasons. The standard mileage rate changes each year. That means the mileage deduction in 2022 2021 rate is different from previous years. It includes factors like gasoline prices, wear-and-tear and more.

There's no limit to the amount of mileage you can claim on your taxes. Even self-employed individuals can make a mileage claim. But, be sure to follow the rules and have a compliant mileage log.

What are the mileage tax deduction rules?

You may be able to deduct mileage for your car, truck, or motorcycle that you use for business purposes. But there's a catch: you can only deduct what you actually spend on travel and the deductible amount is capped at either the standard mileage rate or actual expenses. For more information about this topic, we recommend reading IRS Publication 463: Travel, Transportation, and Entertainment Expenses.

Business miles you may be able to deduct:

Commuting miles. If you are an employee and must travel between your home and your employer's workplace, you can deduct the ordinary and necessary expenses of traveling between those points. Generally, this includes the costs of driving from your house to your place of work and back again to your house. It also could include parking fees or other costs associated with commuting.

Business miles away from home. If you travel away from home for business reasons, you can deduct mileage related to those trips as an unreimbursed employee business expense on Schedule A (Form 1040). The deductible amount is the standard mileage rate multiplied by the number of miles you traveled. You can also deduct actual expenses, such as gas and oil, or other fees related to your travel that aren't reimbursed by your employer.

Business miles from your regular place of work. If you regularly work in one city but live in another, you may be able to deduct the miles you drive between the two locations. 

Who is eligible for a tax deduction for mileage?

If you are trying to decide on whether or not to deduct mileage for business purposes, it’s a good idea to learn the eligibility requirements and tax rules. The Internal Revenue Service does not provide detailed guidelines on who is eligible for a deduction for business miles. However, one possible eligibility category is that you may be eligible if you use your car primarily in your work-related travel. For example, if you travel from home to your office every morning or from place to place on the job, you are likely eligible for a deduction. 

Other possible eligibility categories include:

• Driving from your home to a business meet or conference.
• Driving from one business meeting or conference to another.
• Driving from different work locations to the same place of employment, such as a business meeting.
• Travel that is not for work purposes but is still necessary for your job and does not involve any personal pleasure or recreation. These types of trips are also eligible for a deduction as long as they are necessary in performing duties as an employee.

What are the standard mileage tax deduction rates? 

For 2022, the standard mileage rates are:

• 62.5 cents per mile for business (58.5 cents Jan-June 2022)
• 22 cents per mile for medical (18 cents Jan-June 2022)
• 14 cents per mile for charity

What are the standard mileage tax deduction rates for prior years?

2021: $0.56
2020: $0.575
2019: $0.58
2018: $0.545
2017: $0.535
2016: $0.54
2015: $0.575
2014: $0.56
2013: $0.56
2012: $0.555
2011: $0.51 

The standard mileage tax deduction rate is set by the IRS every year and this is the deductible rate for your drives.

What are the standard mileage tax deduction rates after 2022?

For 2023, the standard mileage rates are:

• 65.5 cents per mile for business, up 3 cents from the midyear increase of 2022
• 22 cents per mile for medical, consistent with the midyear rate set for second half of 2022
• 14 cents per mile for charity, unchanged from 2022

How to calculate a mileage tax deduction

Calculating a mileage tax deduction can be daunting because it varies so much depending on a person's particular tax situation. The Internal Revenue Service (IRS) says there are approximately 40 different pairs of possible deductions, but the most common one is the "Standard Mileage Rate". This is the rate at which taxes are calculated for business miles. If your employer provides you with a car to commute to and from work, then you're considered an employee and have this deduction available.

The standard mileage rate

The standard mileage rate is the fixed amount an employer can deduct as a business cost per mile. The IRS has set this rate in 2022 at 62.5 cents for July-December and 58.5 cents for January - June.

Claiming a standard mileage deduction

If you plan on taking the standard mileage deduction, then it helps to document your business miles. It is also important to keep a logbook or record of these miles and invest in an app like MileIQ that can assist you with tracking your vehicle usage. Since these records will be audited, it's important not to claim any more business miles than you actually drive for business purposes.

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Do I qualify for mileage deduction?

If driving is a requirement of your job, it’s more than likely you qualify for mileage deduction. With that in mind, the IRS only lets you deduct trips that are for business purposes. That means you can deduct drives for business-related errands, such as visits to clients, travel from your office to a work site, the bank, post office, or company meeting. Here’s the main way to know if you qualify. If you fall under the following categories:

• Small business owners
• Self-employed
• Independent contractors, such as rideshare drivers
• Freelancers

Apart from the responsibilities of your main job, the IRS permits mileage deduction for temporary job sites as well. A temporary work location is a short-term job that lasts less than one year. You can also write off odd jobs and side-gigs like babysitting, pet car, and lawn services. As long as you keep sufficient records of these drives for the 2021 tax year, you can expect trouble-free filing.

However, restrictions to the standard mileage rate deduction do apply. You must use the standard mileage rate the first year you use a car for business. If you fail to do so, you are stuck using the actual expense method for the lifespan of your vehicle. You can also deduct interest paid on a car loan, parking fees, and tolls for business trips, but you can't deduct parking ticket fines or the cost of parking your car at your designated place of work.

Why choose MileIQ?

We know there is a lot to unpack when it comes to mileage tax deductions. But the tax experts at MileIQ make it their mission to inform readers on the benefits of mileage logging and why you should do it for taxes. Whether you choose the standard mileage rate or give the actual expense method a shot, that’s up to you! Just know the only way you can claim a mileage tax deduction in 2021 is if you have the records to prove it.