The IRS has given at least one tiny glimmer of hope for your 2023 finances amid a backdrop of economic uncertainty: You can now increase your tax write-off for fuel costs.
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On Dec. 29, the agency announced a bump 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 final six months of 2022, the standard mileage rate for business travel was 62.5 cents per mile, up 4 cents from the rate effective at the start of 2022. The new rate was implemented to help drivers cope with the surging price of gasoline. The average national price hit a new record high of $5.016 a 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. Normally, the agency updates the mileage rates once a year in the fall for the next calendar year — The last time the IRS made a midyear increase was in 2011.
In addition to the 3 cent increase in 2023 from midyear, the 22-cent per mile driven rate for medical or moving purposes given to qualified active-duty members of the Armed Forces remains unchanged from 2022.
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Another option for taxpayers is to calculate the actual costs of using their vehicles rather than using the standard mileage rates. For charitable organizations, the rate remains unchanged at 14 cents per mile because it is set by statute.
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This article originally appeared on GOBankingRates.com: Write Off Your Mileage? The IRS Expands the Deduction for Fuel Costs in 2023
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