The Internal Revenue Service is raising the standard mileage rate used to calculate tax-deductible business trips because of soaring gasoline prices.
The agency announced a four-cent increase to 62.5 cents per mile, or about 6.8%, in response to the rising prices. Annual inflation ticked upward slightly in May, rising to an annual rate of 8.6% — a 40-year high — largely driven by more prices of food, fuel and housing.
The new rate takes effect July 1.
The IRS typically only updates its mileage rate once per year in the fall for the following calendar year but made an exception. The last time the agency made a similar midyear increase was in 2011.
“The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices,” IRS Commissioner Chuck Rettig said in a statement. “We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses and others who use this rate.”
Fuel costs, vehicle depreciation, insurance and other costs to operate a vehicle are taken into consideration by the IRS when determining the mileage rate.
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