By Tom Ochsenschlager, J.D., CPA
In Notice 2022-03, the IRS announced the deductible mileage rates for 2022:
- 58.5 cents per mile for business use,
- 18 cents per mile for medical or moving (for active duty military individuals), and
- 14 cents per mile for service with charitable organizations.
As an alternative to the standard rates, the actual cost of operating the vehicle can be used if complete records of the cost are maintained and the depreciable value of the vehicle is limited to no more than $56,000.
Generally, an employee does not have to report employer mileage reimbursements as income if the reimbursement amount does not exceed the 58.5 cents per mile substantiated for business use of their vehicle. However, the notice provides guidance:
- For the deductions available to employees to offset reimbursements exceeding that amount, and
- For the income to be reported where employers provide automobiles for the personal use of an employee.
In both these circumstances, the cost of operating the vehicle (an auto, van or truck) can be based on the deductible mileage rate cited above or, as an alternative, a computation of the “out-of-pocket” costs of the vehicle’s use where the depreciation deduction is limited to a maximum value of $56,000 for the vehicle.