As of January 1st, 2022, the standard mileage rate for business use of a car, van, pickup truck, or panel truck has risen to 58.5 cents per mile, an increase of 2.5 cents from the 2021 rate. This change reflects the increased cost of driving and operating a vehicle for work purposes. In 2022, taxpayers may use the new rate as one of the ways to calculate the deduction for the business use of their automobile. The portion of the business standard mileage rate that is treated as depreciation for purposes of calculating reductions to basis will be 26 cents per mile for 2022, the same as for 2021.

Taxpayers have two options when it comes to deducting business use of an automobile. They may use the business standard mileage rate to calculate their deductions as an ordinary and necessary business expense. Or they may claim actual allowable expense amounts by maintaining adequate records and sufficient evidence. If their car is for business and personal use, they will need to keep detailed records and subtract out personal miles. Commuting miles (driving to and from your residence) to your primary workplace or office is excluded from the allowable business miles.

If a company reimburses their employees for business driving purposes, the IRS standard mileage rate is the standard amount used for this reimbursement and should be adjusted accordingly.

View the full IRS announcement here.

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If you have questions regarding how this increase may affect you or your business, please contact our accountants at The Innovative CPA Group at 203-489-0612. Or contact us via our contact form.

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2022-10-10T14:19:46+00:00February 16th, 2022|Business, Connecticut, Deductions, Federal, Individual, Tax, Tax Credit, Tax Return|

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