following the mid-year standard mileage rate Increase, IRS raises it again for 2023
Updated: 1/27/2023
The Internal Revenue Service has announced another increase in the optional standard mileage rate for 2023. Taxpayers may use the optional standard mileage rates to calculate the deductible costs of operating an automobile for business and certain other purposes.
For the 2023 year, the standard mileage rate for business travel has raised 3 cents to now be 65.5 cents per mile compared to the end of last year. The rate for deductible medical or moving expenses (available for active-duty military members) remains the same as in 2022, with the mileage rate being 22 cents. Charitable mileage rates have also reminded the same at 14 cents per mile. These new rates became effective on January 1, 2023.
More $ Per Mile for 2023
In recognition of recent gasoline price increases and inflation, the IRS made again made adjustments to the standard mileage rates. The IRS normally updates the mileage rates once a year in the fall for the next calendar year. Notice 2023-03 contains the optional 2023 standard mileage rates and the maximum automobile cost used to calculate the allowance under a fixed and variable rate (FAVR) plan.
“The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices,” said IRS Commissioner Chuck Rettig. “We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses, and others who use this rate.”
While fuel costs are a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation, insurance, and other fixed and variable costs.
The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use instead of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.
The midyear increase we saw in 2022 for the optional mileage rates are rare. The last time the IRS made such an increase was in 2011.