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If you qualify for mileage deductions, the Internal Revenue Service has an update that could help you trim your 2022 tax bill. Due to high gas prices, the IRS has announced a mid-tax year adjustment to the standard mileage rate.
This will impact self-employed drivers who use their cars for business purposes and military members who use their cars for moving and medical purposes. The rates will increase beginning on July 1, 2022, and will be in place for the rest of the 2022 tax year.
Gas prices have continued to increase all around the country. No matter where you live, you’re paying much higher gas prices than a year ago. For many households, this is an additional financial stress.
If you’re self-employed and use your car for business travel, you can get a tax deduction for the business use of your vehicle. Many taxpayers choose to use the standard mileage rate because it’s more straightforward.
At the end of 2021, the IRS announced temporary changes to the standard mileage rate for the 2022 tax year. For self-employed drivers using their car for business needs, the standard rate was adjusted from $0.56 per mile to $0.585 cents to account for inflation.
The IRS also temporarily increased mileage rates for active-duty military members who use their cars for medical or moving purposes.
To combat the continuous increase in gas prices, the IRS has since announced another update that could impact your 2022 tax return.
The standard mileage rate will rise for the second half of 2022
On June 9, 2022, the IRS announced that they would make a mid-year mileage rate change to combat the much higher-than-normal gas prices.
From July 1, 2022, through the end of 2022, the standard mileage rate for business travel will increase from $0.585 per mile driven for business to $0.625 per mile.
The rate will also increase for active-duty military members who use their vehicles for medical or moving purposes. The mileage rate is $0.18 per mile for the first half of 2022, while the rate will increase to $0.22 per mile for the second half of 2022.
For taxpayers who use their cars for charitable purposes, the mileage rate of $0.14 per mile remains unchanged from 2021.
Could this save you money?
What does this change mean for your bank account?
Since this update is for the current tax year, taxpayers won’t see instant relief. However, this tax change could impact your taxes when it comes time to file next April.
It costs more to own and operate a vehicle this year, so this is positive news for taxpayers who qualify for this deduction.
It’s not too early to start planning for your 2022 taxes
While it’s only the middle of the current tax year, it’s not too early to start thinking ahead about filing your tax return. Keeping accurate records and knowing what tax considerations to make throughout the year could help you better handle your taxes next spring.
If you’re overwhelmed by the tax filing process and need assistance, you may want to use tax software. The right software can guide you through each step of the filing process and help you maximize your deductions to minimize your tax liability.
Filing yearly tax returns is something that most Americans have to do. Check out our tax resources if you want to learn more about the filing process or want money-saving tax tips.
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