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IRS Issue Mid-Year Mileage Rate Increase for 2022

Due to a rise in gas prices and for the first time since 2011, on June 9, the Internal Revenue Service (IRS) announced a rare mid-year increase in the standard mileage rate used to calculate the deductible costs of operating an automobile for business and certain other purposes. The increase began on July 1 and increased the rate to 62.5 cents per mile (previously 58.5 cents per mile).

The new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents per mile for the remainder of 2022, up four cents from the rate effective at the start of 2022. The rate for charitable organizations is set by statute and will remain unchanged at 14 cents per mile.

Next Steps for Employers

The IRS rate for mileage reimbursement is an optional business standard rate that is typically used to compute the deductible costs of operating an automobile for business use, in lieu of tracking actual costs. Employers who are not in states where they are required by law to reimburse employees for business-related expenses, including mileage, can set any reimbursement rate, up to the IRS rate. Regardless of whether employers decide to adopt the IRS reimbursement rate, it is recommended that the organization’s reimbursement policy clearly specifies the amount that employees will receive for mileage and that the policy is applied consistently.

It is also recommended that employers check state-specific laws to determine if they have any additional obligations to reimburse employees for business-related expenses. Where federal guidelines conflict with state law, employers must follow the requirement that provides the greatest benefits to employees.

HR Works, Inc., headquartered at 200 WillowBrook Office Park in Fairport (Rochester), New York, with an office in East Syracuse, is a human resource management outsourcing and consulting firm serving clients throughout the United States. HR Works provides scalable strategic human resource management and consulting services, including: affirmative action programs; benefits administration outsourcing; HRIS self-service technology; full-time, part-time and interim on-site HR managers; HR audits; legally reviewed employee handbooks and supervisor manuals; talent management and recruiting services; and training of managers and HR professionals.