IRS Releases 2023 Standard Mileage Rates

The IRS has increased optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes in 2023.

Beginning Jan. 1, 2023, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be:

• 65.5 cents per mile driven for business use, up 3 cents from the 2022 midyear increase and 7 cents higher than the initial 2022 rate
• 22 cents per mile driven for medical or moving purposes, unchanged from 2022
• 14 cents per mile driven in service of charitable organizations (set by statute and unchanged from 2022)

The rates apply to electric and hybrid-electric vehicles and gasoline and diesel-powered vehicles.

The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile.

The rate for medical and moving purposes is based on the variable costs.

Deduction Requirements

Taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses.

Taxpayers also cannot 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.

The IRS noted that taxpayers can calculate the actual costs of using their vehicle, rather than using standard mileage rates. 

Low-mileage drivers often chose that option.

Taxpayers can calculate the actual costs of using their vehicle, rather than using standard mileage rates.

If taxpayers chose to use standard mileage rates, they must opt to do so in the first year the car is available for business use.

For the years that follow, they can choose either standard mileage rate or actual expenses.

The IRS released the 2023 rates on Dec. 29, along with the maximum automobile cost used to calculate the allowance under a fixed and variable rate plan.

The notice also provides the maximum fair market value of employer-provided vehicles first made available to employees for personal use in calendar 2023.