While many Americans are preparing to file their 2022 taxes, the Internal Revenue Service (IRS) is announcing new updates for 2023 taxes.
The agency has released the standard mileage rates that will be eligible for tax deductions for cars, vans, panel trucks, or pickup trucks for charities, moving, business, or medical purposes. These updates will hold up for: diesel-powered cars, gas-powered cars, hybrid vehicles, and electric vehicles.
What’s new for 2023?
As of January 1, 2023, the following updates will go into effect for the standard mileage rates for the 2023 tax season:
14 cents per mile driven for charities (unchanged from 2022)
65.5 cents per mile driven for businesses (up 3 cents from the second half of 2022)
22 cents per mile for medical or moving purposes for active-duty Armed Forces members
What should taxpayers know?
When deducting the expenses for using a personal vehicle for business, medical, or charitable purposes, taxpayers have the option of either calculating their exact expenses or using the IRS’ standard mileage rate.
In this announcement, the IRS explained that any leased vehicles must have costs deducted using the standard mileage rate. Additionally, the first year that a vehicle is used for business purposes, taxpayers must utilize the standard mileage rate. After that, taxpayers are free to choose between the standard mileage rate and calculating the exact expenses.
It’s also important to note that claiming expenses related to moving is now only valid for active members of the Armed Forces who are being stationed at different locations.
Each year, the IRS utilizes fixed and variable data related to owning and operating a vehicle to set the yearly standard mileage rate.
To read the full 2023 standard mileage rates report, click here.