2023 Updates to the Standard Mileage Rate
The IRS usually adjusts the standard mileage rate, and 2023 is no exception. What is peculiar about this change in rate is it comes after the mid-year adjustment to the rate in June 2022.
The new rate has been raised 3 cents per mile effective January 01, 2023. This raises the rate from 62.5 cents to 65.5 cents per mile. While the IRS did raise the optional standard mileage rate, it did not raise either the rate for deductible medical or moving expenses, nor the charitable mileage rate. The rate for deductible medical or moving expenses (which is only available for active-duty military) remains at 22 cents per mile, and the rate for charitable organizations remains at 14 cents per mile which is set by statute.
The rate and any increase or decrease (the rate was last lowered in 2021) is based on national studies of both the fixed and variable costs associated with owning and operating a vehicle which includes items like fuel costs, depreciation, and insurance to name a few.
This increase means something a little different depending on whether you are the business owner reimbursing mileage or the employee receiving the reimbursement. If you are a business owner and your employees use this rate to compute the deductible costs of operating their personal vehicle for business use in lieu of tracking actual costs or you are reimbursing mileage, you will see an increase of 3 cents that you will need to pay this year. Likewise, if you are an employee who uses this rate or are reimbursed mileage, you will see an increase of 3 cents in the payment you receive.
For more details about tax rates refer to the Davis & Hodgdon 2023 Tax Tables.
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Article authored by Michael Hamilton, Associate Accountant