Mileage Reimbursement Rate for 2023: What To Expect
Driving can be more than just a part of your daily routine — it can also give you a deduction on your tax return. If you drive as part of your business, while volunteering for a charitable organization or for other eligible purposes, you might be able to deduct the cents per mile rate set by the IRS.
See: 3 Signs You’re Serious About Raising Your Credit Score
2023 Mileage Reimbursement Rate
In December 2022, the IRS announced the standard mileage rates for 2023. Although rates for business miles increased, rates for other qualified miles remain unchanged from the the second half of 2022. Here are the 2023 mileage reimbursement rates:
Business use: 65.5 cents per mile. This mileage rate for business increased by 3 cents from 62.5 cents per mile in 2022.
Military moving: 22 cents per mile. Qualified active-duty Armed Forces members can deduct the miles they drive while moving, as long as the move stems from a military order for a permanent change of station.
Medical care: 22 cents per mile. Miles driven to receive medical care are eligible for the medical and dental expenses deduction at a rate of 22 cents per mile. You can deduct medical expenses that exceed 7.5% of your adjusted gross income if you itemize your deductions.
Charitable organizations: 14 cents per mile. You can deduct 14 cent per mile for driving you did while volunteering for a qualified charitable organization. Parking fees and tolls are also deductible.
Note that prior to the 2017 Tax Cuts and Jobs Act, taxpayers could deduct miles as part of their deductions for non-military moving expenses and unreimbursed employee expenses. The TCJA eliminated those deductions until Jan. 1, 2026.
How To Calculate Mileage Costs
In order to get the most bang for your buck, it is important to know how to calculate your mileage costs. Here is the breakdown for the two most common ways to use the standard mileage rate: business tax deductions and employee mileage reimbursements.
Business/Self-Employed Tax Deductions
It is vital to keep track of your mileage for the tax year, which you can do manually by logging miles in a notebook or notes app on your phone, or automatically with a tracking app for your phone or another mobile device. When it comes time to file your taxes, here is how you would calculate your miles.
Total up your miles. For this example, your total is 500 business miles.
Multiple that number by the $0.655 standard mileage rate for business.
500 business miles multiplied by $0.655 is $327.50
Your deduction would be $327.50.
You can use this method of calculation for military move, medical expense and charity miles, too — just swap out the business mileage rate for the applicable rate.
Employee Mileage Reimbursements
Although you can’t deduct unreimbursed employee miles on your tax return, your employer might reimburse you for each mile you drive for your job.
If it does, calculate the reimbursement in the same way you calculate the tax deduction — multiply the number of miles you drove by your employer’s mileage reimbursement rate, which may or may not differ from the IRS rate for business miles. If, for example, you drove 100 miles and your employer reimburses you at 65.5 cents per mile, multiply 0.655 by 100. Your reimbursement would be $65.50.
Alternative to Mileage Deductions
There’s another way to calculate tax deductions for the use of your vehicle: actual expenses.
Actual expenses are the actual costs of operating your vehicle for any of the purposes allowed by the IRS: business, a military move, medical expenses or volunteering. These expenses would include the cost of gas and oil in place of the mileage rate, plus parking fees and tolls, which the IRS says are separately deductible whether your use the standard mileage rate or actual expenses.
Final Take: Manage Your Mileage
The cost of all the miles you put in for your business, volunteer work, medical care and volunteering doesn’t have to come entirely out of your pocket. Just don’t wait until the end of the tax year to try and figure out how many miles you have driven for these deductible activities. The IRS requires that you maintain written evidence of the mileage you claim.
You can do that by keeping a daily log in a notebook or notes app in your phone. But the easiest way might be to download an app to your phone that tracks the mileage for you. Everlance, Stride and Driversnote are just a few of the highly rated apps available that take the hassle out of keeping track of your miles. In a pinch, you can always snap a photo of your odometer before and after your travels.
FAQ
What is the mileage rate for 2023 for truck drivers?
Truck drivers get the standard mileage rate of 65.5 cents per mile. This rate increased from 62.5 cents per mile as of January 2023.
To figure out your deduction, take the number of miles driven for business and multiply it by this rate. For example, if you drove 10,000 miles for work, your deduction would be $6,550.
How do you calculate mileage costs?
To calculate your mileage costs, you simply multiply the number of miles you drove by the cents per mile rate that applies to you: 65.5 cents for business miles, 22 cents for medical or military moving miles or 14 cents for charity miles.
What are the best mileage-tracking apps?
Many mileage tracking apps can help you easily account for miles and expenses you have incurred throughout the tax year. Here are some highly recommended tracking apps to consider:
– Everlance
– Rydoo
– Zoho Expense
– Shoeboxed
Daria Uhlig contributed to the reporting for this article.
Information is accurate as of March 29, 2023.
This article originally appeared on GOBankingRates.com: Mileage Reimbursement Rate for 2023: What To Expect
