If you’re eligible for mileage deductions, the Internal Revenue Service has an update that may help lower your 2022 tax bill. Due to high gas prices, the IRS announced an adjustment in the middle of the tax year of the standard mileage rate.
This will impact self-employed drivers who use their cars for business purposes and military members who use their cars for medical and moving purposes. Rates will increase effective July 1, 2022 and will be in place for the remainder of the 2022 tax year.
Gas prices continued to rise across the country. No matter where you live, you’re paying much higher gas prices than a year ago. For many households, this is an additional financial stress.
If you are self-employed and use your car for business trips, you can benefit from a tax deduction for the business use of your vehicle. Many taxpayers choose to use the standard mileage rate because it is simpler.
In late 2021, the IRS announced temporary changes to the standard mileage rate for the 2022 tax year. For self-employed drivers using their cars for business purposes, the standard rate was adjusted by $0.56 per mile to $0.585 to account for inflation.
The IRS has also temporarily increased mileage rates for active duty military members who use their cars for medical or moving purposes.
To combat the continued rise in gas prices, the IRS has since announced another update that may impact your 2022 tax return.
The standard kilometer rate will increase for the second half of 2022
On June 9, 2022, the IRS announced that it would be making a mid-year mileage rate change to combat much higher than normal gasoline prices.
From July 1, 2022 through the end of 2022, the standard mileage rate for business travel will decrease from $0.585 per mile driven for business to $0.625 per mile.
The rate will also increase for active duty military members who use their vehicle for medical or moving purposes. The mileage rate is $0.18 per mile for the first half of 2022, while the rate will increase to $0.22 per mile for the second half of 2022.
For taxpayers who use their car for charitable purposes, the kilometer rate of $0.14 per mile remains unchanged from 2021.
Could this save you money?
What does this change mean for your Bank account?
Since this update is for the current tax year, taxpayers will not receive immediate relief. However, this tax change could have an impact on your taxes when you file your return next April.
It costs more to own and operate a vehicle this year, so that’s good news for taxpayers who qualify for this deduction.
It’s not too early to start planning your 2022 taxes
Although it’s only the middle of the current tax year, it’s not too early to start thinking ahead about filing your tax return. Keeping accurate records and knowing what tax considerations to keep in mind throughout the year could help you better manage your taxes next spring.
If you’re overwhelmed with the tax filing process and need help, you can use tax software. The right software can guide you through every step of the filing process and help you maximize your deductions to minimize your tax liability.
Filing annual tax returns is something most Americans have to do. Discover our fiscal resources if you want to know more about the filing process or if you want tax tips to save money.
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