The Internal Revenue Service (IRS) has announced the standard mileage rates for 2023, pivotal for food truck owners and operators to calculate the deductible costs of running their mobile culinary ventures. Effective from January 1, 2023, these rates are essential for managing the expenses associated with vehicle use in the food truck industry. Here are the standard mileage rates for business in 2023.
- 62.5 cents per mile for business miles driven, an adjustment reflecting changes in the cost of operating a vehicle.
- 14 cents per mile driven in service of charitable organizations, consistent with prior years, as this rate is set by statute.
The increase in the business mileage rate from previous years underscores the IRS’s acknowledgment of the higher costs associated with vehicle operation, including fuel, maintenance, and depreciation. These changes are vital for food truck operators to note as meticulous mileage tracking can lead to significant tax deductions. This is great news if you’re preparing your food truck taxes for 2023.
It is important to highlight that, following the Tax Cuts and Jobs Act, certain deductions have been modified. For instance, miscellaneous itemized deductions for unreimbursed employee travel expenses are no longer permissible, and deductions for moving expenses are largely eliminated, except for active-duty military members under specific circumstances.
2023 Fuel Price Insights
In 2023, the price of gasoline in the United States experienced changes but ended on a more stable note. On average, people paid $3.52 for a gallon of gas. The highest price during the year was $3.88 per gallon in mid-September, which was much lower compared to the high of $5.01 per gallon in June 2022. By the end of 2023, gas prices had decreased to $3.05 per gallon.
Gas prices can go up and down for many reasons, such as changes in the cost of oil, political issues around the world, problems with supply chains, and how much gas people are using. The fact that prices went down at the end of 2023 might mean that some of these issues have gotten better, making things more stable.
How much does it cost to fill up your food truck?
For those running food trucks, lower fuel costs at the end of the year could mean spending less on driving around, which could help them make more money or explore new areas without worrying too much about the cost of gas.
However, it’s always good to be cautious because gas prices can change quickly due to many complex factors. Plus, as more people and businesses start using electric vehicles and renewable energy, the demand for gasoline might change, which could affect prices and how much people use gas in the long run.
In short, the gas prices in 2023 showed a move towards stability, offering a chance for people and businesses to adjust. But, it’s important to remember that the situation can change, and staying informed and prepared is key.
Navigating Vehicle Expenses
Besides leveraging the standard mileage rate, food truck owners have the option to calculate the actual costs of using their vehicle for business. This method involves detailed record-keeping of all vehicle-related expenses, offering an alternative that could potentially maximize deductions based on individual circumstances.
However, it’s worth noting that once a depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or a Section 179 deduction is claimed for a vehicle, the business standard mileage rate cannot be used for that vehicle. Furthermore, the use of the standard mileage rate is limited to four vehicles operated simultaneously.
Final Thoughts
The standard mileage deduction rate has increased significantly over the last decade, showing a positive trend for food truck owners. Specifically, the rate per mile has increased by approximately 10.62% from 2014 to 2023.
This increase is beneficial for food truck owners because it directly impacts the deductible expenses related to the operation of their vehicles. The higher the mileage rate, the more they can deduct for business miles driven.
| Year | Rate per Mile |
|---|---|
| 2014 | 56.5 |
| 2015 | 57.5 |
| 2016 | 54.0 |
| 2017 | 53.5 |
| 2018 | 54.5 |
| 2019 | 58.0 |
| 2020 | 57.5 |
| 2021 | 56.0 |
| 2022 | 58.5 |
| 2023 | 62.5 |
Lower fuel costs mean lower operating expenses for our food trucks, giving us the chance to travel further without worrying too much about the cost, or maybe even pocket a little extra profit.
The thing with gas prices, though, is that they can be pretty unpredictable. They’re affected by a lot of different factors like oil prices, global events, and how much people are driving. So, even though prices were more favorable at the end of 2023, we always have to be ready for them to change.
For those of us in the food truck business, the drop in gas prices last year was a bit of good news. It helped us keep our trucks rolling and our kitchens cooking. But we know better than to expect things to stay the same forever, so I’ll keep watching those prices and planning for the future and making adjustments.
