“New IRS Mileage Rate Split in Half-Year for Business Use of a Vehicle”
The IRS has announced an increase in the standard mileage rate for business use of a vehicle. Beginning on July 1, 2022, the rate will be 62.5 cents per mile, up from 58.5 cents per mile for the first half of the year.
This change will affect many businesses that rely on the use of company-owned or employee-owned vehicles for business purposes. The standard mileage rate is used to calculate the deductible costs of operating a vehicle for business, charitable, medical, or moving purposes.
The IRS adjusts the standard mileage rate each year based on changes in the cost of operating a vehicle. The new rate takes into account factors such as fuel prices, maintenance and repairs, and vehicle depreciation. The increase in the mileage rate reflects the rising costs of operating a vehicle and will help to ensure that businesses are able to fully deduct the costs of using a vehicle for business purposes.
The new rate will apply to miles driven on or after July 1, 2022. Businesses that use the standard mileage rate can either use the new rate or the actual expenses of operating the vehicle, whichever results in a greater deduction.
It is important for businesses to track their mileage accurately, whether they use the standard mileage rate or actual expenses method. This includes keeping records of the start and end odometer readings, the business purpose of the trip, and the total miles driven. Using an integrated accounting solution or mileage tracking apps can help to automate this process and ensure compliance with IRS regulations.
In conclusion, the increase in the standard mileage rate for business use of a vehicle is a reminder of the importance of tracking business mileage accurately. The higher rate will help businesses to fully deduct the costs of using a vehicle for business purposes and should be taken into account when planning for the upcoming fiscal year. Businesses should also ensure that they are using an appropriate method of tracking their mileage and keeping accurate records to ensure compliance with IRS regulations.