Here is the latest update from the IRS regarding the 2023 optional standard mileage rates. These rates are used to calculate the deductible costs of operating a vehicle for business, charitable, medical, or moving purposes.
Starting from January 1st, 2023, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) are as follows:
- For business use: 65.5 cents per mile driven, which is up 3 cents from the midyear increase that set the rate for the second half of 2022.
- For medical or moving purposes for qualified active-duty members of the Armed Forces: 22 cents per mile driven, consistent with the increased midyear rate set for the second half of 2022.
- For service of charitable organizations: 14 cents per mile driven, which is set by statute and remains unchanged from 2022.
It’s worth noting that these rates apply to all types of vehicles, including electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles.
However, under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers do have the option to calculate the actual costs of using their vehicle instead of using the standard mileage rates.
If you choose to use the standard mileage rate, you generally must opt to use it in the first year the car is available for business use. In later years, you can choose either the standard mileage rate or actual expenses. For leased vehicles, the standard mileage rate method must be used for the entire lease period (including renewals) if the standard mileage rate is chosen.
If you need more detailed information, Notice 2023-03 contains the optional 2023 standard mileage rates, as well as the maximum automobile cost used to calculate the allowance under a fixed and variable rate (FAVR) plan. Additionally, Notice 2023-03 provides the maximum fair market value of employer-provided automobiles first made available to employees for personal use in calendar year 2023 for which employers may use the fleet-average valuation rule or the vehicle cents-per-mile valuation rule.
If you have any questions about these updates or how they may impact your business or personal tax situation, please feel free to contact us at email@example.com or call us at 703-437-8877.
Please note that based on current IRS rules and standards, the advice contained herein is not intended or written by the practitioner to be used and cannot be used by the taxpayer to avoid penalties.
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