Motus: Rate Increase Comes at Time of High Fuel Costs, Inflation Impacting Repairs and Maintenance, and Continued Supply Chain Challenges Driving Up Costs
BOSTON–(BUSINESS WIRE)–#irs–The Internal Revenue Service (IRS) will increase the national business mileage standard rate to 62.5 cents, calculated with data provided by Motus.i The rate increase will be effective July 1, 2022 through December 31, 2022.
This is an increase of four cents from the currently established rate of 58.5 cents that was in effect for the first six months of the year. The increase to the business mileage standard rate comes at a time when driving costs such as fuel have reached record highs, inflation is affecting repair and maintenance costs and supply chain challenges continue to drive up the cost of new and used vehicles.
“A confluence of global events has led to broken supply chains, rapidly rising inflation and record-breaking fuel prices, which have significantly driven up the cost of driving a vehicle,” said Karen O’Byrne, President and Interim CEO of Motus. “Relying on any sort of flat reimbursement approach, like the IRS business mileage standard rate, can lead to wasted spend and potential corporate liability, especially in times of uncertainty and volatility. Organizations that have adopted methodologies like FAVR, that factor in the many components of vehicle costs, have realized significant cost savings in a way that is compliant with federal and state tax and labor laws, while ensuring that their mobile workforces are fairly and accurately reimbursed no matter how volatile the market gets.”
Beyond the individual tax deduction, the IRS business mileage standard rate offers a tax-free threshold for reimbursements that U.S. employers make to their employees. Organizations are typically required to reimburse their workforce for the business use of their mixed-use assets, or personally owned assets such as vehicles that are required for their jobs. While the IRS standard mileage rate offers a tax-free threshold for reimbursements, it doesn’t account for any real-time fluctuation or geographic variability in costs. Companies that rely on that rate are likely not reimbursing employees for actual driving costs, and are creating winners and losers by over or under reimbursing employees for their costs.
As the definitive leader in mobile workforce solutions, Motus cultivates a deep understanding of total costs of vehicle usage. Using insights from the world’s largest retained pool of drivers, the company conducts statistical analysis of data to establish real-time cost estimates for its customers through Motus solutions, and to inform the IRS about trends in business driving.
The Motus fixed and variable rate (FAVR) methodology was designed to more accurately and fairly reimburse employees for the exact cost of driving for work and is paid tax-free under IRS Revenue Procedure 2019-46. Motus estimates that organizations have saved more than $1.4 billion using FAVR reimbursement compared to the IRS business mileage standard since 2011.
For more information about the IRS business mileage standard rate, mileage reimbursement and vehicle management options, please visit https://resources.motus.com/.
Motus is the definitive expert in mobile workforce solutions. Its platform simplifies the reimbursement and management of vehicle and device costs through personalized calculations. Powered by an unmatched pool of data, refined over more than 80 years, and updated in real time, Motus is the platform of choice for top Fortune 500 companies and organizations committed to workplace agility. Motus automotive data, captured and analyzed across the world’s largest retained pool of drivers, also underpins the annual Internal Revenue Service (IRS) business mileage standard, the amount an individual can deduct for business vehicle expenses. For more information please visit www.motus.com or connect with us on Twitter, Facebook, Instagram or LinkedIn.
i Motus is the parent entity of Runzheimer International
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