The IRS has introduced a midyear improve in the usual mileage charges for enterprise and medical use of an vehicle, and for deducting shifting bills. For journey on or after July 1, 2022, the enterprise normal mileage charge is 62.5 cents per mile (up from the unique 2022 charge of 58.5 cents per mile—see our Checkpoint article). The speed when an vehicle is used to acquire medical care—which can be deductible beneath Code § 213 whether it is primarily for, and important to, the medical care—is 22 cents per mile for journey on or after July 1, 2022 (up from 18 cents per mile). The speed for deducting vehicle bills which are shifting bills beneath Code § 217 may even improve from 18 to 22 cents per mile for journey on or after July 1, 2022. For taxable years starting after 2018 and earlier than 2026, nevertheless, the shifting expense deduction is out there just for sure strikes by members of the Armed Forces on energetic responsibility (see our Checkpoint article). The speed for charitable use of an vehicle will stay unchanged at 14 cents per mile.
Normal mileage charges can be utilized as a substitute of calculating the precise bills which are deductible. For instance, the enterprise normal mileage charge can be utilized as a substitute of figuring out the quantity of fastened bills (e.g., depreciation, lease funds, and license and registration charges) and variable bills (e.g., fuel and oil) which are deductible as enterprise bills. Solely variable bills are deductible as medical or shifting bills, so the medical and shifting charge is decrease. (Parking charges and tolls associated to make use of of an vehicle for medical or shifting expense functions could also be deductible as separate gadgets.) These and different particulars about utilizing the usual mileage charge will be present in Income Process 2019-46 (see our Checkpoint article).
EBIA Remark: Ordinarily, the IRS updates mileage charges solely annually, however often it makes interim changes like this one, which displays current gasoline worth will increase. Transportation bills which are deductible medical bills beneath Code § 213 typically will be reimbursed on a tax-free foundation by a well being FSA, HRA, or HSA. (To simplify administration, some employers’ well being FSAs or HRAs exclude medical transportation bills from the listing of reimbursable gadgets.) The relevant reimbursement charge is the one in impact when the expense was incurred. For extra data, see EBIA’s Cafeteria Plans handbook at Sections XX.L.8.b (“Mileage Price for Touring to Acquire Medical Care”) and XX.M (“Desk of Widespread Bills, Displaying Whether or not They Are for ‘Medical Care’”). See additionally EBIA’s Client-Pushed Well being Care handbook at Sections XV.C (“What Is an HSA-Certified Medical Expense?”) and XXIV.B (“HRAs Could Reimburse Solely Code § 213(d) Bills”); and EBIA’s Fringe Advantages handbook at Part IV.F (“Employer Reimbursements for Enterprise Use of an Worker’s Automobile”).
Contributing Editors: EBIA Employees.
