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IRS Issue Mid-Year Mileage Rate Increase for 2023

On December 29, 2022, the Internal Revenue Service (IRS) announced the 2023 standard mileage rate. The increase began on January 1 and increased the rate from 62.5 cents per mile to 65.5 cents per mile.

These rates apply to electric and hybrid-electric automobiles, as well as gasoline- and diesel-powered vehicles.

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.