The IRS Just Changed the Standard Mileage Deduction to Help With High Gas Prices

What is the Standard Milage Rate?

The IRS Standard Milage Rate is the rate the IRS— and many businesses— use for determining the cost of travel. The IRS uses it for your tax deductions at the end of the year.

What Happened?

So you know how gas prices are like, STUPIDLY high right now?

If you're like me, you've seen that TikTok where the person is filling up and screaming “I HAVE A HONDA. BRO, I HAVE A HONDAAA!” and felt it deep within your bones.

Well, the IRS has felt the pinch at the pump, and they've actually gone ahead and given a nice little acknowledgement in the form of raising the standard mileage rate for the rest of the year (Starting July 1) to 62.5 cents per mile, up 4 cents from the beginning rate of 2022.

While there are typically adjustments made each year, it’s is a rare maneuver for the IRS to change the mileage rate mid-year.

What does the IRS Standard Mileage Increase mean for you?

It means that on your taxes, you will be able to deduct more money on your taxes for each mile travelled as a business expense starting mid-year. It also means its you will need to make sure you're keeping good records, because this will make things a bit more confusing than normal come tax time next year.

It also means that if YOU base your mileage rates/ reimbursement from clients for travel on the standard IRS mileage rates (many of our contract templates do this!) then you'll need to go through and update the rate from $0.58 to $0.62 to really maximize the amount your clients are reimbursing you for travelling.

What should I be doing now with the new IRS Standard Mileage Rate?

First, note the current mileage on your vehicle. That will be important. Any work mileage after this will be the new IRS standard rate.

Next, if you're not using a mileage tracking app like MileIQ or the built-in Quickbooks mileage tracker app, (only available on some QB plans) you really should start (unless you're so type A that you track everything by hand, at which point KUDOS).

Mileage is one of the BIGGEST and BEST ways to get deductions for your business come tax time, so I highly, HIGHLY recommend paying for an app like MileIQ (no, this isn't an affiliate link either!). For dollars each month, you will be able to automatically capture EVERY DRIVE you make for business-- which can be a LOT of cash come tax time! For example: last year, my mileage knocked off three thousand dollars from my tax liability. BOOM.

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As always, I'll be keeping an eye out for any additional updates, and I'll be bugging the CPA down the hall for details as they release them. Keep on truckin! (see what I did there? 🚙)