Four Cent Increase, IRS Standard Mileage Rate

Departing from the usual annual adjustment, the IRS has announced a mid-year increase — effective July 1, 2022 – on its employee vehicle reimbursement rate from 58.5 cents/mile to 62.5.

Commissioner Chuck Rettig stated: “The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices. We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses and others who use this rate.”

California’s Division of Labor Standards Enforcement recognizes the IRS rate to normallysatisfy an employer’s obligation under Labor Code 2802 to reimburse workers for their “actual and necessary” employment-related vehicle use.  However, an employee who can show business-related vehicle expenses in excess of the IRS rate is entitled to the employer’s payment of the difference.

Take-Away: Employers applying the IRS standard should reimburse work-related employee vehicle use at the new 62.5 cent/mile rate from July 1 on.

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

See also:

• What’s New in 2022 Mileage Reimbursement Rates – IRS Standard Mileage Rate Increasing 2.5 Cents (December 28, 2021)
• What’s New in 2020 Road Trip Dip IRS Mileage Rate Down a Half Cent Effective January 1, 2020 (January 30, 2020)

Helena Kobrin
July 8, 2022