Kirsch Kohn Bridge CPAs + Advisors
  • About
    • Firm Overview
    • Our Team
    • International Affiliation
  • Services
    • Assurance and Accounting
    • Tax
    • Advisory Services
  • Industries
    • Construction
    • Manufacturing and Distribution
    • Not-For-Profits
    • Professional Services
    • Real Estate
    • Retail
    • Technology
  • Insights
  • Careers
  • Contact
  • Client Resources
  • Pay Online
  • Menu Menu
  • LinkedIn

Will the Standard Business Mileage Rate Go Up in 2022? Yes!

December 27th, 2021/Tax

After two years of no increases, the optional standard mileage rate used to calculate the deductible cost of operating an automobile for business will be going up in 2022 by 2.5 cents per mile. The IRS recently announced that the cents-per-mile rate for the business use of a car, van, pickup or panel truck will be 58.5 cents (up from 56 cents for 2021).

The increased tax deduction partly reflects the price of gasoline. On December 21, 2021, the national average price of a gallon of regular gas was $3.29, compared with $2.22 a year earlier, according to AAA Gas Prices.

Don’t want to keep track of actual expenses?

Businesses can generally deduct the actual expenses attributable to business use of vehicles. This includes gas, oil, tires, insurance, repairs, licenses and vehicle registration fees. In addition, you can claim a depreciation allowance for the vehicle. However, in many cases, certain limits apply to depreciation write-offs on vehicles that don’t apply to other types of business assets.

The cents-per-mile rate is beneficial if you don’t want to keep track of actual vehicle-related expenses. With this method, you don’t have to account for all your actual expenses. However, you still must record certain information, such as the mileage for each business trip, the date and the destination.

Using the cents-per-mile rate is also popular with businesses that reimburse employees for business use of their personal vehicles. These reimbursements can help attract and retain employees who drive their personal vehicles a great deal for business purposes. Why? Under current law, employees can’t deduct unreimbursed employee business expenses, such as business mileage, on their own income tax returns.

If you do use the cents-per-mile rate, keep in mind that you must comply with various rules. If you don’t comply, the reimbursements could be considered taxable wages to the employees.

How is the rate calculated?

The business cents-per-mile rate is adjusted annually. It’s based on an annual study commissioned by the IRS about the fixed and variable costs of operating a vehicle, such as gas, maintenance, repair and depreciation. Occasionally, if there’s a substantial change in average gas prices, the IRS will change the cents-per-mile rate midyear.

When can the cents-per-mile method not be used?

There are some cases when you can’t use the cents-per-mile rate. It partly depends on how you’ve claimed deductions for the same vehicle in the past. In other situations, it depends on if the vehicle is new to your business this year or whether you want to take advantage of certain first-year depreciation tax breaks on it.

As you can see, there are many factors to consider in deciding whether to use the standard mileage rate to deduct vehicle expenses. Contact us if you have questions about tracking and claiming such expenses in 2022 — or claiming 2021 expenses on your 2021 income tax return.

© 2021

TAGS: Tax

Share This
  • Share on Facebook
  • Share on Twitter
  • Share on WhatsApp
  • Share on Pinterest
  • Share on LinkedIn
  • Share on Tumblr
  • Share on Vk
  • Share on Reddit
  • Share by Mail

Sign Up For Insights

This field is for validation purposes and should be left unchanged.

Categories

  • Advisory
  • Assurance
  • Tax

Archives

  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021

Insights

The Inflation Reduction Act includes wide-ranging tax provisions

August 16, 2022/0 Comments/in Tax/by LG-Admin

The Inflation Reduction Act is about to become law. Learn how its tax provisions might affect you. Continue Reading The Inflation Reduction Act includes wide-ranging tax provisions

Read more
http://kkbcpa.com/wp-content/uploads/2022/08/1.jpg 292 560 LG-Admin https://kkbcpa.com/wp-content/uploads/2021/12/KKB-Logo-w-text.png LG-Admin2022-08-16 11:59:532022-08-16 11:59:54The Inflation Reduction Act includes wide-ranging tax provisions

FTB Error – PTE Refunds Must be Returned

August 10, 2022/0 Comments/in Tax/by LG-Admin

Due to errors by the California Franchise Tax Board (FTB) in its processing of passthrough entity tax payment vouchers, the FTB is erroneously issuing refunds of the 2022 prepayments of the passthrough entity elective tax that were paid with the FTB Form 3893 (PTE) vouchers. Continue Reading FTB Error – PTE Refunds Must be Returned

Read more
http://kkbcpa.com/wp-content/uploads/2022/08/shutterstock_698158717.jpg 334 500 LG-Admin https://kkbcpa.com/wp-content/uploads/2021/12/KKB-Logo-w-text.png LG-Admin2022-08-10 17:44:262022-08-11 11:52:45FTB Error – PTE Refunds Must be Returned

Estimated tax payments: Who owes them and when is the next one due?

August 9, 2022/0 Comments/in Tax/by LG-Admin

Self-employed taxpayers generally must make quarterly estimated tax payments. But even if you’re not self-employed, you may have to make them to avoid a penalty if you don’t have enough federal tax withheld. Here are the rules. Continue Reading Estimated tax payments: Who owes them and when is the next one due?

Read more
http://kkbcpa.com/wp-content/uploads/2022/08/1660054345331.jpg 292 560 LG-Admin https://kkbcpa.com/wp-content/uploads/2021/12/KKB-Logo-w-text.png LG-Admin2022-08-09 15:58:062022-08-10 16:59:12Estimated tax payments: Who owes them and when is the next one due?

FTB Error – PTE Refunds Must be Returned

August 10, 2022/0 Comments/in Tax/by LG-Admin
Read more
http://kkbcpa.com/wp-content/uploads/2022/08/shutterstock_698158717.jpg 334 500 LG-Admin https://kkbcpa.com/wp-content/uploads/2021/12/KKB-Logo-w-text.png LG-Admin2022-08-10 17:44:262022-08-11 11:52:45FTB Error – PTE Refunds Must be Returned

Estimated tax payments: Who owes them and when is the next one due?

August 9, 2022/0 Comments/in Tax/by LG-Admin
Read more
http://kkbcpa.com/wp-content/uploads/2022/08/1660054345331.jpg 292 560 LG-Admin https://kkbcpa.com/wp-content/uploads/2021/12/KKB-Logo-w-text.png LG-Admin2022-08-09 15:58:062022-08-10 16:59:12Estimated tax payments: Who owes them and when is the next one due?

Bonus Depreciation: Businesses Should Act Now

July 28, 2022/0 Comments/in Tax/by LG-Admin
Read more
http://kkbcpa.com/wp-content/uploads/2022/07/3.jpg 286 508 LG-Admin https://kkbcpa.com/wp-content/uploads/2021/12/KKB-Logo-w-text.png LG-Admin2022-07-28 13:11:092022-07-29 13:34:59Bonus Depreciation: Businesses Should Act Now
View All

Sign up for insights

This field is for validation purposes and should be left unchanged.
KKB alternate logo

Kirsch Kohn & Bridge LLP

Phone: 818-907-6500
Fax: 818-783-0725
21800 Oxnard St., Suite 900
Woodland Hills, CA 91367
info@kkbcpa.com

Firm Overview
Our Team
International Affiliation
Contact
Careers

Sign up for our newsletter
Client Resources
Pay Online

© 2022 Kirsch Kohn & Bridge LLP. All rights reserved. Privacy Policy

How to Account for Change OrdersKPIs: What are they, and which ones count?KPIs: What Are They, and Which Ones Count?
Scroll to top