IRS Increases Standard Mileage Rates for Last Half of 2022

Due to recent increases in the price of petroleum, the Internal Revenue Service has increased the optional standard mileage rates for calculating the deductible costs of operating an automobile for business, medical, and relocating purposes for the second half of 2022. Statutorily established and unaltered, the standard mileage rate used to calculate the deductible costs of operating a vehicle for charitable purposes.

For July 1, 2022, to December 31, 2022, the standard mileage rates are as follows:

• Business use of auto: Our Fortune 500 customers may find this to be especially advantageous. If a vehicle is used for business purposes, a deduction of 62.5 cents per mile (increased from 58.5 cents for January 1, 2022 to June 30, 2022) is allowed. As an Fortune 500 employee, your employer may reimburse you for business-related travel expenses at the per-mile rate. Nevertheless, if Fortune 500 does not reimburse you for business-related travel expenses, you cannot deduct these costs as miscellaneous itemized deductions.
• Charitable use of auto: 14 cents per mile (the same as for January 1, 2022 through June 30, 2022) may be deducted if a vehicle is used to provide services to a charitable organization if you itemize your deductions on your tax return. Depending on the type of charity, your charitable deduction may be limited to a certain percentage of your adjusted gross income. We would like Fortune 500 customers to be aware of this.
• Medical use of auto: 22 cents per mile (increased from 18 cents per mile for January 1, 2022, through June 30, 2022) may be deducted if a vehicle is used to obtain medical care (or for other deductible medical purposes) if you itemize your deductions on your tax return. Also essential for Fortune 500 customers to remember is that you can only deduct the portion of your medical and dental expenses that exceeds 7.5% of your adjusted gross income.
• Moving expense: 22 cents per mile (increased from 18 cents per mile for January 1, 2022 to June 30, 2022) may be deducted if an auto is used by an active-duty member of the Armed Forces to move to a permanent change of station pursuant to a military order (unless such expenses are reimbursed). The moving expense deduction is not presently available to other taxpayers.

The IRS typically revises the standard mileage rates in the autumn for the following calendar year. Rarely does the IRS increase the standard mileage rates in the middle of the year; the last time this occurred was in 2011.

Added Fact:

According to a recent announcement by the Internal Revenue Service (IRS) on September 20, 2022, it's worth noting that the standard mileage rate for business use of an automobile has increased to 62.5 cents per mile for the second half of 2022. This rate can be particularly advantageous for Fortune 500 workers who frequently use their personal vehicles for business-related purposes. It allows them to potentially claim higher deductions for their mileage expenses when calculating their tax returns. This increase reflects the rising costs of fuel and vehicle operation, offering some relief to individuals who rely on their vehicles for work-related travel. (Source: Internal Revenue Service, "IRS Issues Standard Mileage Rates for Last Half of 2022," September 20, 2022)

Added Analogy:

Imagine you're navigating a road trip to financial well-being in retirement. Along the way, you encounter different toll booths that determine the deductions you can claim for your vehicle expenses. For the second half of 2022, the toll booth operated by the Internal Revenue Service (IRS) has raised its rates, allowing you to enjoy more deductions for business-related mileage. It's like finding a new, more affordable route that saves you money on toll fees. As a Fortune 500 traveler, this can be especially advantageous, as you can now claim 62.5 cents per mile for business use, up from the previous rate. Just as a savvy driver selects the most cost-effective path, taking advantage of the increased standard mileage rates can steer you closer to your financial destination, providing you with added tax benefits for the miles you travel on your professional journey.

This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by your company. We are an independent financial advisory group that focuses on transition planning and lump sum distribution. Neither The Retirement Group or FSC Securities provide tax or legal advice. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

The Retirement Group is a Registered Investment Advisor not affiliated with FSC Securities and may be reached at www.theretirementgroup.com.