IRS Standard Mileage Rate for Business Tax Deductions

How Much You Can Deduct for Business Driving

A man driving a car
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If you drive for your business, whether it's to see clients, to transport customers for a ride-sharing company, or any other type of business, you'll want to know the IRS standard mileage rate for the year in order to do your business taxes. 

The standard rate is an optional rate to use when calculating the deductible cost of driving a vehicle for business, charitable, medical, or moving expense purposes. The IRS bases the business rate on an annual study of the fixed and variable costs of owning and operating a vehicle.

You can also calculate the actual cost of running your car if you think those expenses are higher than the standard rates. Read on to learn which rates to use and how to calculate your actual expenses.

Key Takeaways

  • Use the standard business rates for the year of your tax return.
  • The standard business rate for the first half of 2022 is 58.5 cents per mile.
  • The standard business rate for the second half of 2022 is 62.5 cents per mile.
  • If you've got employees you reimburse for business driving expenses, you may want to use a Fixed and Variable Rate (FAVR) plan, which can be tax-free.

Which Year's Mileage Rate Should You Use?

Use the standard mileage rate for the year of the tax return, not the year you're filing the return. For example, you'll use the 2022 mileage rates for your 2022 tax return, even though you're filing it in 2023.

Business mileage rates are only for business driving. If you use a car part of the time for personal use, you must separate out this use and deduct only the cost of business use for the car.

2022 Standard Mileage Rates 

The Standard Mileage Rate is the maximum per-mile rate allowed by the IRS for calculating mileage for operating a car or truck for business purposes. These are the rates to use when you prepare your 2022 tax return in 2023.

The IRS usually only issues new rates once a year. But because gas prices rose so much during the first half of 2022, the IRS issued two rates for the year.

  • 58.5 cents per mile for business driving from Jan. 1 to June 30
  • 62.5 cents per mile for business driving from July 1 to Dec. 31
  • 18 cents per mile for driving for medical or moving reasons from Jan. 1 to June 30
  • 22 cents per mile for mileage used for medical or moving reasons from July 1 to Dec. 31
  • 14 cents per mile driven in service of charitable organizations all year

The maximum allowance for 2022 a Fixed and Variable Rate (FAVR) plan is $56,100 for automobiles, trucks, and vans.

What Is a FAVR Allowance?

A FAVR allowance is a way to reimburse employees who use their own vehicles for work-related activities. It can be tax-free for the employer as long as you follow IRS rules.

A FAVR allowance includes two different payments:

  • Periodic variable payments, which are based on a cents-per-mile rate to cover variable costs, like gas and repairs
  • Periodic fixed payments, consisting of a flat amount to cover fixed costs, including depreciation, lease payments, and insurance.

The FAVR allowance must be used for driving for business purposes, not personal driving.

No Business Mileage Deduction for Employees

The miscellaneous itemized tax deduction for unreimbursed employee expenses, including mileage, was eliminated under the Tax Cuts and Jobs Act, effective for the 2018 tax year and going forward. This means you can't take a tax deduction for business driving expenses not paid by your employer.

You also can't claim deductions for moving expenses, unless you're on active duty with the military and under orders to make a permanent move.

The first step in calculating business mileage is determining which method to use. Businesses have two options for taking expense deductions for mileage: The standard mileage rate or actual costs. Each has advantages and disadvantages.

Using the Standard Mileage Deduction

If you are taking the IRS standard mileage deduction, you will need to provide a listing of all business trips, reasons, dates, and mileage.

The two IRS requirements for using the standard mileage rate include:

  1. You must use the standard mileage rate the first year you use a car, then in later years, you can choose to use either the standard rate or actual expense method.
  2. If you lease a car for business use and you choose the standard rate the first year, you must use this rate for the entire lease period.

The IRS also stipulates that to use the standard mileage rate:

  • You must not operate a fleet of five or more cars at the same time
  • You must not have claimed a depreciation deduction for the car using any method other than straight-line,
  • You must not have claimed a Section 179 deduction on the car,
  • You must not have claimed the special depreciation allowance on the car, and
  • You must not have claimed actual expenses after 1997 for a car you lease.

Using the Actual Expense Method

If you think the standard rates are lower than what your business driving costs really were, you can calculate your actual expenses. You'll need complete information on all expenses associated with your business use of the vehicle if you're claiming actual expenses, including:

  • Gasoline purchases
  • Oil and maintenance expenses
  • Lease payments for the tax year
  • Annual depreciation of the vehicle
  • Registration fees
  • Insurance
  • Repairs
  • Tolls
  • Tires
  • Garage rent
  • Parking fees
  • Finally, add your business mileage expense to your tax return. On Schedule C for small businesses, enter car and truck expenses on Line 9.

Previous Years of Business Driving Rates

You might need the information on the driving rates for that year if you're working on a previous year's tax return.

2021 Business, Medical/Moving, and Charitable Driving Rates

  • 56 cents per mile for business miles driven
  • 16 cents per mile driven for medical or moving purposes  
  • 14 cents per mile driven in service of charitable organizations (fixed by Congress, never adjusted for inflation)

2020 Business, Medical/Moving, and Charitable Driving Rates

  • 57.5 cents per mile for business miles driven
  • 17 cents per mile driven for medical or moving purposes  
  • 14 cents per mile driven in service of charitable organizations (fixed by Congress, never adjusted for inflation)

2019 Business, Medical/Moving, and Charitable Driving Rates

  • 58 cents per mile for business miles driven
  • 20 cents per mile driven for medical or moving purposes  
  • 14 cents per mile driven in service of charitable organizations (fixed by Congress, never adjusted for inflation)

2018 Business, Medical/Moving, and Charitable Driving Rates

  • 54.5 cents per mile for business miles driven
  • 18 cents per mile driven for medical or moving purposes  
  • 14 cents per mile driven in service of charitable organizations (fixed by Congress, never adjusted for inflation)

2017 Business, Medical/Moving, and Charitable Driving Rates

  • 53.5 cents per mile for business miles driven 
  • 17 cents per mile driven for medical or moving purposes  
  • 14 cents per mile driven in service of charitable organizations

Frequently Asked Questions (FAQs)

Can I claim my mileage to and from work on my taxes?

No, business owners can't deduct mileage to and from work. You can only start claiming mileage for the business trips you make after you arrive at work or your first business destination.

Is it better to write off gas or mileage?

You can either use the standard mileage rates when claiming deductions for your business driving, or you can calculate your actual driving expenses. That includes not only gas, but also a percentage of maintenance, repairs, tires, and other costs. If you drive a lot or you just drive a gas guzzler, it may be worth calculating which method lets you deduct more.

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