Every year, the IRS sets a mileage rate for the next 12 months. As an important part of any business accounting strategy, you can use this mileage rate to calculate the mileage deductions you can get reimbursed for when you use your personal vehicle to conduct work-related travel.
The IRS originally set the mileage rate for 2022 at 58.5 cents per mile. However, the IRS recently made changes to the standard mileage rate for business travel, updating it to 62.5 cents per mile for the remaining six months of 2022. This is the first time the IRS has changed their predetermined mileage rate since 2011.
Typically, the IRS announces the standard mileage rate for the upcoming year in the fall. But the IRS decided to make update in light of rising gas prices. As you work on your accounting tasks in relation to mileage, use the prior mileage rate for any travel conducted from January 1 through June 30, 2022 and the updated mileage rate from July 1, 2022 until the end of the year.
Although the IRS made this update to help businesses and consumers struggling with the high price of fuel costs, other factors impact the yearly mileage rate. These include things like variable and fixed costs, insurance, and depreciation.
If you want to know how the increased mileage rate will affect your business and its accounting operations going into the second half of 2022, we would be happy to give you additional information. Contact us at Balanced Bookkeeping of NC today to speak with one of our accounting professionals.