Heads up: IRS has announced the new standard business mileage rate for 2022, and just as expected, it’s increased. So it’ll cost your company more to reimburse employees’ vehicle travel this coming year.
Here’s what you and your A/P pros need to know.
Detailed mileage rate info
The business mileage rate was expected to go up this year due to rapidly rising gas prices, along with other increased automobile maintenance costs. And IRS delivered.
As of Jan. 1, 2022, the standard business mileage rate will be 58.5 cents a mile. This is 2.5 cents higher than the 2021 rate.
Along with the standard business mileage rate, the agency also announced the new mileage rates for other purposes. They are:
- 18 cents per mile for medical or moving purposes for active military personnel (up 2 cents from 2021’s rate), and
- 14 cents per mile for charitable purposes (rate is set by law and remains unchanged).
What Finance should watch for
A new standard business mileage rate brings about the potential for reimbursement errors in the new year. Employees could turn in inaccurate expense reports using outdated rates.
With that in mind, A/P should remind them to double-check their figures before submitting reports. This is especially crucial since more employees may drive for business trips this year due to the spread of omicron and other coronavirus variants.
It’s also important to communicate the change to your people ASAP, whether it’s through memos or email blasts with the latest info from IRS. And have all references to the mileage rate updated in your company’s materials and policies, as well as your business’s intranet.
And remind A/P to be on the lookout for any mileage expenses that seem off or unnecessarily high in expense reports. Some employees may try to offset other travel costs by inflating their mileage, so be sure to tell your A/P folks to question any reports that look inaccurate.
While you don’t want A/P to assume employees are committing fraud, the possibility should still be on their radar.