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What Is a Mileage Rate and Who Can Claim it on a Tax Return?

Claim it on a Tax Return

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If you have to drive a vehicle for business, then you may be eligible for a tax deduction that applies to driving mileage for specific purposes like work, medical, or even moving. But what exactly is this mileage rate and who qualifies for this deduction on their tax returns? Looking for tax deductions that you qualify for that can help to lower the amount of taxes you’re paying is an important part of financial planning.

What Is a Mileage Rate?

A mileage rate is the amount of money it costs to drive one mile. While technically this can vary based on the prices of gas and whether you’re driving in an urban area or on a highway, there’s a standard mileage rate used by the IRS for tax purposes in order to calculate the deduction that you can claim.

What Is the Standard Mileage Rate?

The standard mileage rate is the cost to drive one mile as determined by the IRS for anyone who can claim that the use of their vehicle and the time spent driving it is a tax-deductible expense. The IRS updated the standard mileage rate effective January 1, 2023. The rate is different depending on the purpose of the driving.

Who Can Claim the Standard Mileage Tax Deduction?

There are four different driving purposes that could qualify you for claiming the standard mileage rate as a tax deduction. These four are listed below, along with what the IRS has defined as the standard mileage rate for that particular type of driving. The IRS rates are the same no matter what type of vehicle you’re driving, from a van or a truck to an electric car.

Driving for Business Use

Some jobs require a lot of driving. You don’t necessarily have to be employed in a driving role in order to qualify. If you are a contractor or if you own your own business and have to drive a lot in that capacity, you may still qualify for this deduction. As of 2023, the IRS has defined the standard mileage rate for business driving as 65.5 cents per mile driven.

Driving for Charitable Purposes

The next qualifying purpose is charity. If you drive your vehicle for charitable purposes, whether that’s on behalf of a charitable organization or as part of a charitable program, you may qualify for a tax deduction. The standard mileage rate for charitable purposes is  14 cents per mile driven.

Driving for Medical Reasons

Driving to and from medical appointments may count as a medical expense. If you’re regularly driving much more than you would otherwise because of a medical condition, you may be able to get a tax deduction of 22 cents per mile driven.

Driving for Moving Purposes

Active duty members of the military may also qualify for a tax deduction for driving if that driving was related to a move that was necessary because of military orders. 22 cents per mile driven is the amount that you could qualify for.

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