New Year, New IRS Mileage Rate Increase

February 3, 2023

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    It seems like just yesterday that we had an increase in the IRS standard mileage rate.  Oh wait, it was practically yesterday.  With the rising cost of fuel, the Internal Revenue Service was prompted to modify its optional standard mileage rate midyear 2022, a rare move.  Now a mere 6 months later, effective January 1, 2023, the standard mileage rates for the use of a vehicle (that is a car, van, pickup, or panel truck; fueled by electric, hybrid, gasoline or diesel) has risen to the following amounts:

· 65.5 cents per mile driven for business use, up 3 cents from the midyear increase setting the rate for the second half of 2022.

·22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, consistent with the increased midyear rate set for the second half of 2022.

· 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.

    Businesses typically use the IRS standard mileage rate as a point of reference for reimbursing employees for the business use of their vehicles. Other options for employers are available so long as they comply with section 2802 of the Labor Code which mandates that employees be reimbursed for “all necessary expenditures or losses incurred by the employee.”  California courts and labor agencies have declared that the IRS standard mileage rate in fact fulfills this employer obligation.  Employers should ensure that its employee reimbursements are updated to account for this increase starting January 1, 2023. 

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