The Internal Revenue Service (IRS) has announced new mileage rates for 2023, which will take effect from January 1st. These rates determine the amount you can deduct from your taxes for any driving you do for business, medical or moving purposes, and charitable work. This year, the IRS has raised the mileage rates to reflect changes in fuel prices, fuel economy, and insurance costs.
For taxpayers who use their car for business purposes, the new mileage rate has increased from 58.5 cents per mile (1st half of 2022) and 62.5 cents per mile (2nd half of 2022) to 65.5 cents per mile. The new rate means that if you drive 1,000 miles for your business, you can deduct $655 from your taxes. This increase of 7 cents per mile may seem like a little, but it can add up over the year, especially for those who drive long distances for work.
The new medical or moving mileage rate has also increased from 18 cents per mile to 22 cents per mile. This increase is more significant, at 4 cents per mile, offsets some of the rising costs of healthcare and moving expenses. If you drive 1,000 miles for medical or moving purposes, you can now deduct $220 from your taxes.
For those who use their car for charitable purposes, the new mileage rate is 14 cents per mile which is the same as in 2022; it is still worth noting as it can make a difference to those who do a lot of charitable work. If you drive 1,000 miles for charity, you can deduct $140 from your taxes.
The IRS updates the mileage rates every year to accurately reflect driving costs. The new rates for 2023 represent a modest increase over the previous year. However, they can still provide a valuable tax deduction for those who use their car for business, medical, moving, or charitable purposes. So, if you plan to drive for any of these reasons in the coming year, keep track of your mileage and take advantage of these updated rates when filing your taxes.
