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On December 29, 2022, the Internal Revenue Service (IRS) announced that the 2023 business standard mileage rate is increasing to 65.5 cents, which is raised from 62.5 cents for the final six months of 2022.
By way of background, the IRS announced a rare midyear mileage rate adjustment on June 9, 2022. That move increased the standard mileage rates for the use of cars, vans, pickups, or panel trucks to 62.5 cents per mile for business use, and 22 cents per mile (which was raised from 18 cents per mile) for when an automobile is used to obtain medical care – which may be deductible under Internal Revenue Code § 213 if it is primarily for, and is essential to, the medical care. These rates were effective July 1, 2022 through December 31, 2022.
While the 2023 business standard mileage rate has increased, the medical mileage rate of 22 cents per mile remains consistent with the aforementioned increase for the second half of 2022.
Mileage to and from a medical service is generally an eligible expense under a healthcare Flexible Spending Account, Health Reimbursement Arrangement, or Health Savings Account.
As gas prices continue to rise, this standard mileage rate increase is welcome relief. While no direct action is required, individual taxpayers should note this increase (and its effective date) when preparing their Calendar Year 2022 income tax filings.
This general summary is intended to educate employers and plan sponsors on the potential effects of recent government guidance on employee benefit plans. This summary is not and should not be construed as legal or tax advice. The government’s guidance is complex and very fact specific. As always, we strongly encourage employers and plan sponsors to consult competent legal or benefits counsel for all guidance on how the actions apply in their circumstances.
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