News | IRS Releases the 2023 Standard Mileage Rate. Why Do We Care? Also, Bonus Tutorial!
Jan 04, 2023
On December 28, 2022, the Internal Revenue Service issued 2023 standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes. The IRS normally updates the mileage rates once late in a year for the next calendar year. However, because of inflation, the rate was adjusted in the middle of the year in 2022.
Beginning on January 1, 2023, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be:
- 65.5 cents per mile driven for business use (up 3 cents from the midyear 2022 rate and up 9.5 cents from the rate for 2021).
- 22 cents per mile driven for medical, or moving purposes for qualified active-duty members of the Armed Forces (this is the same as the midyear 2022 rate and up 6 cents from 2021).
Announcement 2022-234 lists the new rates.
Notice 23-03, contains the optional 2023 standard mileage rates, as well as a wealth of other details relating to IRS standard mileage rules.
Why It Matters in Affordable Housing
In affordable housing, these rates become a factor when calculating net income from some businesses households may be involved in (such as gigger economy drivers with Uber, Lyft, or Grubhub) or when calculating medical expense deductions for mileage to and from medical treatment or appointments for subsidized rent programs. As vehicle-related self-employment that may involve mileage is a HUGE emerging issue, we think that this is very timely!
Some interesting side notes: for business use of a vehicle, taxpayers can use the standard mileage rate but 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 another calculation based on 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.
Mileage Calculation Tutorial
for net income from a business
Anticipated business income for 2023 with deductions for business use of a vehicle or
Medical use deductions when calculating subsidized rent.
Example
Mitch is a driver with the food delivery service SlopHop. He has been delivering food with the app-based service for 5 months. His income certification will be effective on August 1. He provides printouts from SlopHop of his gross income with taxable business deductions. The net income, not including any mileage, is $5,551.59. The printouts also list that he has driven 1,054 miles while working for the service.
Looking for quality affordable housing occupancy training? Check out our Succeed at Qualifying Households series of courses. There are options for all major Affordable Housing programs. You can read more HERE.
There is a very good chance that the topic of this post is covered in an online on-demand course at Costello University.
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