The Internal Revenue Service (IRS) recently announced the 2023 standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Rate Breakdown
Effective Jan. 1, 2023, the standard mileage rate for the use of a vehicle, which includes cars, vans, pickups or panel trucks, will be:
- 65.5 cents per mile driven for business use, up 3 cents from the midyear increase 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 in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.
In addition to gasoline and diesel-powered vehicles, the stated rates also apply to electric and hybrid-electric vehicles. The standard business mileage rate is based on an annual study of the fixed and variable costs of operating a vehicle, whereas the rate for medical or moving purposes is based solely on variable costs.
As always, instead of taking the standard mileage rate, taxpayers have the option of calculating the actual costs of using their vehicle.
Using the Correct Rate
Employers need to ensure updated rates are changed in their payroll system to the 2023 rate for all business travel on or following Jan. 1, 2023. Any mileage on employees’ 2023 expense reports that took place before Jan. 1, 2023, is subject to the 2022 mid-year rate of 62.5 cents per mile.
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