Clear your mileage? The IRS is expanding the deduction for fuel costs in 2023
The IRS has at least given a glimmer of hope for your finances in 2023 amid economic uncertainty: You can now increase your tax write-off for fuel costs.
On Dec. 29, the agency announced an increase in the optional standard mileage rate starting Jan. 1, 2023 — which will now be 65.5 cents per mile driven. Taxpayers can use the new rate to calculate the deductible costs of operating an automobile for business and certain other purposes.
For the last six months of 2022, the standard mileage rate for business travel was 62.5 cents per mile, up 4 cents from the rate in effect at the beginning of 2022. The new rate was implemented to help drivers to cope with the increase in the price of gasoline.
The national average price hit a new record high of $5.016 per gallon on June 14, 2022, according to AAA. That’s up from $4,452 a month ago and $3,080 as recently as last year.
In response, the IRS made a special adjustment for the final months of 2022. The agency normally updates mileage rates once a year in the fall for the following calendar year – The last time the IRS made a mid-year increase was in 2011.
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Another option for taxpayers is to calculate the actual costs of using their vehicles rather than using standard mileage rates. For charities, the rate remains unchanged at 14 cents per mile because it is set by law.
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