The IRS has issued the standard mileage rates for 2023. While the business use standard mileage rate is up 3 cents from the 2022 mid-year increase, the standard mileage rates for charitable, medical or moving purposes for qualified members of the Armed Forces remain consistent with last year’s rates. The update is effective January 1, 2023.
The standard mileage rates for 2023 as noted in IRS Notice 2023-03 are as follows:
- 65.5 cents per mile driven for business use, up from 62.5 cents in 2022
- 22 cents per mile driven for medical purposes
- 22 cents per mile driven for moving purposes for qualified active-duty members of the Armed Forces
- 14 cents per mile driven in service of charitable organizations
Taxpayers may use the rates to calculate the qualified deductible costs of operating an automobile, including electric, hybrid-electric, gasoline and diesel-powered vehicles. The IRS determines the standard rates each year based on an annual study by an independent contractor that examines the fixed and variable costs of operating a vehicle.
While taxpayers have the option to use the standard rates outlined above, they may choose to calculate their deductible based on the actual costs of using their vehicle, known as a fixed and variable (FAVR) plan. This includes costs associated with gas, oil, repairs, insurance, registration fees, etc.
Determining the method for calculating your deductible may vary for each person and depends on personal circumstances. If you have questions about which method is right for you or how the rate update will affect your taxes, contact a member of our team today.