On June 9, 2022, the Internal Revenue Service (“IRS”) announced an increase in the standard mileage rate used to calculate employee mileage reimbursement for the remainder of 2022. The IRS explained that the increase in the rate is because of the “recent gasoline price increases.” This increase if formalized in Announcement 2022-13.
Effective July 1, 2022, the standard mileage rate for business travel will increase to 62.5 cents per mile (up 4 cents from the rate effective at the start of the year).
Under California Labor Code § 2802, employers must reimburse their employees “for all necessary expenditures or losses incurred by the employee” in the discharge of the employee’s duties or of the directions of the employer. As part of those necessary expenditures, employers are required to reimburse employees for using their personal vehicles for business purposes.
The federal rate for car expenses can be calculated using the standard mileage rate or a fixed and variable rate (FAVR). Thus, employers who opt for the mileage reimbursement method should be aware of the standard mileage rate increase that goes into effect July 1, 2022.
Note that until the rate increases, for travel reimbursed from January 1 through June 30, 2022, employers should continue to use the rates set forth in Notice 2022-03.
If you have questions concerning your business’ compliance with the mileage rate regulations and requirements, please contact the attorneys at Sagaser, Watkins & Wieland, P.C.