IRS Increases Standard Business Mileage Rate for 2023

In a year-end announcement, the IRS increased the standard business mileage rate.

For 2023, the rate is 65.5 cents per mile, an increase of 3 cents from the 2022 midyear adjustment. The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile.

The 2023 standard medical mileage rate remains unchanged at 22 cents per mile. The standard charitable rate, which is set by statute, also remains unchanged for 2023 at 14 cents per mile.

Taxpayers may decide to track actual costs of operating a vehicle instead of using standard mileage rates. However, if a taxpayer intends to use the standard mileage rate, they generally must use it in the first year that a vehicle is available for business use. Then, in subsequent years, the taxpayer may choose between the standard mileage rate and actual costs.

It is also important to note that, based on current tax law, taxpayers cannot deduct unreimbursed business mileage on Schedule A as an itemized deduction. However, employers can reimburse business expenses up to the standard mileage rates, based on substantiation of the mileage, on a tax-free basis.

This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.