Shortly before the new year, the IRS announced annual increases to the standard mileage rates organizations use to calculate the deductible costs of certain vehicle operations.
The rate for business use of a car, van, pickup or panel truck is now 65.5 cents per mile. This represents an increase of 3 cents from the agency’s midyear increase back in June for the second half of 2022, when the IRS set the per mile rate at 62.5 cents.
Meanwhile, the IRS did not adjust the rate of 22 cents per mile for vehicle operations related to medical or moving purposes for qualified active-duty members of the armed forces. All rates apply to electric and hybrid-electric vehicles as well as gasoline- and diesel-powered vehicles.
The IRS typically adjusts the standard mileage rate for business use annually, but last year, the agency took the unusual step of implementing a midyear increase. In a June press release, the IRS previously said the midyear increase had been necessitated in part by rising fuel costs.
Gas prices could continue to fluctuate widely next year, according to travel and navigation service GasBuddy. The company’s 2023 Fuel Outlook found that while prices may be lower in early 2023, a jump in seasonal demand during the summer months could send prices past the $4 per gallon mark. GasBuddy also estimated Americans would spend more than $470 billion on gasoline in 2023, a decline of $55 billion from 2022.
“Extreme amounts of volatility remain possible, but should become slightly more muted in the year ahead,” Patrick De Haan, head of petroleum analysis at GasBuddy, said in a press release. “I don’t think we’ve ever seen such an amount of volatility as we saw this year, and that will be a trend that likely continues to lead to wider uncertainty over fuel prices going into 2023.”
More broadly, employers have faced pressure to cut back costs in the face of rampant inflation during the past year. President Joe Biden included the topic in his 2022 State of the Union address, in which he called on employers to reduce their costs rather than decrease wages.
But the prospect of an economic downturn has hit HR operations particularly hard, perhaps most prominently signaled by the waves of layoffs announced in 2022’s final weeks. Voluntary separations also have gained traction, according to a recent ResumeBuilder and Pollfish survey, which found that 3 in 4 companies had offered voluntary separations last year.