Updated Mileage Rates and Other 2023 Considerations

 The IRS released the standard mileage rates for the 2023 tax year:

• 65.5 cents per mile driven for business (up from 62.5 cents as of July 1, 2022)

• 22 cents per mile driven for medical purposes and qualified moving for active-duty military (no change from July 1, 2022)

• 14 cents per mile driven in service of charitable organizations (no change from July 1, 2022)

These mileage rates apply to all vehicles (ICE and electric) and must be substantiated with a mileage log.

As always, you can choose to use the actual expense method instead of using the standard mileage rates provided by the IRS. If you choose this method in order to take advantage of bonus depreciation, be aware the limit has decreased from 100% in 2022, to 80% in 2023. This new limit applies to all qualifying business assets, not just vehicles.

A few other adjustments that go into effect in 2023:

• The provision to deduct 100% of business meals purchased from restaurants returns to its normal level of 50% in 2023

• $6,500 contribution limit for IRAs (up from $6,000) with the same $1,000 catch-up if 50 and older

• $22,500 contribution limit for 401(k) plans (up from $20,500) with a catchup up of $7,500 (up from $6,500) for those 50 and older

• $66,000 contribution limit for defined contribution plans (up from $61,000)