Updated Mileage Rate for 2023 Tax Deductions

Jan 3, 2023

The IRS has updated their standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable or medical purposes.

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

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

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.  Which is the best tax deduction for you? Please make sure you consult with your tax advisor as this deduction can be significant for you and your business. Reach out to me to discuss.

Taxpayers can use the standard mileage rate but generally must opt to use it in the first year the car is available for business use. Then, in later years, they can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.

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