The IRS has recently published a notice of proposed changes to the mileage reimbursement rate for 2023. This change will affect all businesses, both large and small, who use mileage for employee and business travel. If you are a business owner or employer, you need to know how these changes will impact your operations and if any changes need to be made to your company’s policies. Here’s what you need to know about the 2023 mileage rate change.
What Is the Current Mileage Rate?
The current mileage rate that the IRS has set for 2021 is 56 cents per mile driven for business use. This rate covers all business-related travel expenses, including gas, repairs, and vehicle depreciation. Additionally, the IRS allows employers to reimburse employees for certain business-related travel expenses at a higher rate of 73 cents per mile.
What Are the Proposed Changes for 2023?
The proposed changes for 2023 would lower the mileage rate from 56 cents per mile to 54 cents per mile for business use. The higher rate of 73 cents per mile for certain travel expenses would remain unchanged. The proposed changes are meant to reflect the decreased cost of gas and other vehicle-related expenses.
Why Is the Proposed Change Being Made?
The IRS is proposing the change to the mileage rate in order to keep the rate up to date with current economic conditions and to ensure that businesses are not overpaying for employee or business travel. The proposed change is also meant to ensure that employees are reimbursed fairly for their business-related travel.
What Are the Implications of the Proposed Change?
The proposed change to the mileage rate for 2023 could have a significant effect on businesses, particularly those who rely heavily on mileage for employee or business travel. Businesses will need to make sure that they adjust their policies accordingly so that employees are reimbursed the correct amount for their travel expenses. Additionally, businesses will need to keep track of their mileage expenses in order to ensure that they are not overpaying for employee or business travel.
What Is the Timeline for the Proposed Change?
The proposed changes to the mileage rate for 2023 are currently open for public comment until April 2, 2023. After this date, the IRS will review all comments and make a final decision on the proposed changes. The new rate is expected to take effect on January 1, 2023.
What Should Businesses Do to Prepare?
Businesses should keep an eye on the proposed changes to the mileage rate and make sure they are up to date on any changes that may be made. Additionally, businesses should review their current policies to make sure they reflect the proposed changes and are in compliance with IRS regulations. Employers should also remind their employees about the proposed changes and make sure they are aware of how it could affect their reimbursement for business travel.
Conclusion
The proposed changes to the mileage rate for 2023 could have a significant effect on businesses that use mileage for employee or business travel. It is important for businesses to stay up to date on the proposed changes and to make sure that their policies are in compliance with IRS regulations. By doing so, businesses can ensure that their employees are properly reimbursed for their business-related travel expenses.