The IRS has announced the 2023 optional standard mileage rates for calculating the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
As of Jan. 1, the standard mileage rates for the use of a car, van, pickup or panel truck are:
- 65.5 cents per mile driven for business use, up 3 cents from the midyear increase setting the rate for the second half of 2022.
- 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the U.S. Armed Forces, consistent with the increased midyear rate set for the second half of 2022.
- 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.
These rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles.
Those who own a business, or are self-employed and use their vehicle for business, may deduct the business use of a vehicle on their income tax return. Some employers also use the IRS’s optional standard mileage rate to pay tax-free reimbursements to employees who use their own personal vehicles for business travel.
However, the 2017 Tax Cuts and Jobs Act no longer allows employees to deduct unreimbursed business mileage unless they are active-duty military. The business travel deduction for non-military employees remains suspended until Jan. 1, 2026.
Taxpayers also can no longer claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
IRS Notice 2023-03 contains the optional 2023 standard mileage rates, as well as the maximum automobile cost used to calculate the allowance under a fixed and variable rate (FAVR) plan.
