How the Current Mileage Rate Works and Why It Changes
The current IRS mileage rate—also known as the IRS standard mileage rate—is a crucial tax tool used by millions of Americans to deduct vehicle-related expenses. Updated annually (and sometimes mid-year), this rate represents the IRS’s estimate of the per-mile cost of operating a personal vehicle for approved uses like business, medical, charitable, or moving (military only).
For taxpayers who drive frequently, especially for work or volunteering, understanding when and why this rate changes can help you plan deductions better, track more accurately, and avoid mistakes during tax season.
Why the Mileage Rate Changes
The IRS doesn’t pick a number arbitrarily. Each mileage rate is based on national averages across key cost categories:
- Fuel prices
- Vehicle depreciation
- Insurance premiums
- Maintenance and repairs
- Licensing and registration fees
When these costs rise or fall significantly, the IRS responds by adjusting the mileage rate. In recent years, fuel price volatility and inflation have caused frequent fluctuations—including a rare mid-year update in 2022.
Historical Examples of Mileage Rate Changes
Let’s look at how the rate has shifted in the past few years:
This mid-year adjustment in 2022 was introduced in July to respond to record-high fuel prices, signaling that the IRS is willing to adjust rates more than once per year when economic conditions demand it.
How Mid-Year Rate Changes Work
If the IRS changes the mileage rate mid-year, you’re required to split your mileage tracking accordingly:
- Miles driven before the change should be calculated using the old rate
- Miles driven after the change should be calculated using the new rate
Example Scenario:
- Jan–Jun: 6,000 business miles × $0.655 = $3,930
- Jul–Dec: 7,000 business miles × $0.67 = $4,690
- Total deduction = $8,620
Accurate logs are critical. If you lump all 13,000 miles into one rate, you risk under- or over-claiming your deduction.
How to Stay Updated on Mileage Rate Changes
The IRS announces new mileage rates in the following ways:
- IRS official website – typically updated in December for the upcoming year
- Press releases through IRS.gov/newsroom
- IRS Notice, published in the Internal Revenue Bulletin
- Tax software alerts (TurboTax, H&R Block, etc.)
- Professional CPA guidance
To stay proactive, set a calendar reminder each December to check the IRS mileage rate, or sign up for IRS tax tips emails.
Who Is Affected Most by Mileage Rate Adjustments?
Self-Employed Individuals
Those filing with Schedule C and tracking their own business mileage stand to gain (or lose) the most with rate changes. A few cents per mile can mean hundreds in deductions over time.
Delivery & Gig Economy Workers
Rideshare drivers or delivery personnel often drive 20,000+ miles per year. A 1.5 cent increase can equate to $300+ in extra deductions.
Employers & HR Departments
Reimbursement programs based on the IRS rate must adjust quickly to stay compliant—especially in years with mid-year rate shifts.
Active-Duty Military (Moving)
When relocating, service members use the moving mileage rate to calculate non-reimbursed travel expenses. A change can affect how much is deducted or reimbursed.
What to Do If the Rate Changes Mid-Year
If you hear the IRS announces a mid-year rate adjustment:
- Update your tracking app or spreadsheet to log miles by date
- Separate logs into two periods—before and after the change
- Apply the correct rate to each group of miles
- Double-check reimbursement systems if you manage employees
- Communicate with your tax preparer or accountant about how to apply changes during filing
Being organized ensures you don’t miss out on potential tax savings—or make costly reporting errors.
Is the Charitable Mileage Rate Ever Adjusted?
No. The IRS charitable mileage rate has been fixed at 14 cents per mile since 1997, because it’s set by statute—not updated automatically like business or medical rates.
There have been repeated calls to update it, but unless Congress passes a new law, it will remain unchanged.
Final Tips for Adapting to Rate Changes
- Use a mileage tracking app like Everlance, MileIQ, or TripLog to simplify date-based logging
- Check for updates every December and July
- Record odometer readings at the start and end of each tax year
- Educate your employees or clients about rate changes and their impact
- Keep IRS-compliant logs for at least 3 years after filing
Conclusion
The current mileage rate is a dynamic number that reflects the real-world costs of driving—and staying on top of how it changes throughout the year is critical for accurate tax reporting.
Whether you’re driving for business, reimbursing employees, or moving for military service, knowing when the IRS updates the mileage rate helps you claim the right deductions and stay compliant. Watch for changes each year, track your mileage precisely, and always apply the correct rate to maximize your tax savings.
Disclaimer: The information provided in this article is for general informational purposes only and should not be construed as tax advice. Tax laws and IRS regulations may change, and the mileage rate adjustments discussed here are based on current information. Always consult a tax professional or the IRS directly to ensure compliance and accuracy when applying the IRS mileage rates to your specific situation.
Published by Jeremy S.
