The Internal Revenue Service (IRS) has issued its 2023 standard mileage rates. Beginning on January 1, 2023, the standard mileage rates for the use of a car, van, pickup, or panel truck will be:
- 65.5 cents per mile for business miles driven (up 3 cents from midyear 2022);
- 22 cents per mile driven for medical or moving purposes; and
- 14 cents per mile driven in service of charitable organizations (currently fixed by Congress).
Note that these rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles. You can find the official rates and guidance in IRS Notice 2023-03.
The standard mileage rate for business is calculated by using an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas, and oil. In contrast, the rate for medical and moving purposes is based just on the variable costs.
As for the charitable mileage rate? If you feel like it always looks the same, it has: by statute, it is not indexed for inflation or otherwise adjusted (it’s been 14 cents per mile since the Clinton era).
Standard mileage rates are used to calculate the amount of a deductible business, moving, medical, or charitable expense (miles driven times the applicable rate). To use the rates, simply multiply the standard mileage rates by the number of miles traveled.
If you use your car for more than one use, you’ll want to keep appropriate records and back out the cost of personal travel. You may also use more than one rate on your tax return. Let’s say, for example, that you drive 20,000 miles in 2023. Of those miles, 10,000 are for personal use, 2,000 are for charitable purposes, and 8,000 are for medical purposes. You would calculate your deduction as follows:
10,000 personal miles x 0 = 0
2,000 charitable miles x .14 = $280
8,000 medical miles x .22 = $1,760
In this example, your total deductible mileage-related expenses would be $2,040, plus any related charges such as parking fees and tolls. You would report your charitable and medical mileage deductions on the applicable lines on Schedule A. Keep in mind that medical miles are still subject to the floor for medical expenses.
What about business mileage? Following tax reform, taxpayers can no longer claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. That deduction was eliminated from Schedule A alongside similar deductions like the home office deduction. This does not affect any deductions that are correctly claimed on Schedule C for the self-employed, freelancers, and independent contractors.
Similarly, most taxpayers can no longer claim a deduction for moving expenses. However, an exception applies to members of the Armed Forces on active duty moving under orders to a permanent change of station.
If these rates don’t adequately reflect your costs, you have the option of deducting actual expenses rather than using the standard mileage rates—though admittedly, that’s a lot more work.
One more thing: these are the rates for the 2023 tax year for the return you’ll file in 2024. You’ll use the 2022 standard mileage rates for the tax return that you’ll file in 2023.
