diff --git a/src/libs/actions/IOU.ts b/src/libs/actions/IOU.ts
index 65cff5baf54a..76376bba7eef 100644
--- a/src/libs/actions/IOU.ts
+++ b/src/libs/actions/IOU.ts
@@ -3170,13 +3170,13 @@ function updateMoneyRequestDistanceRate(
     policy: OnyxEntry<OnyxTypes.Policy>,
     policyTagList: OnyxEntry<OnyxTypes.PolicyTagLists>,
     policyCategories: OnyxEntry<OnyxTypes.PolicyCategories>,
-    taxAmount?: number,
-    taxCode?: string,
+    updatedTaxAmount?: number,
+    updatedTaxCode?: string,
 ) {
     const transactionChanges: TransactionChanges = {
         customUnitRateID: rateID,
-        ...(taxAmount ? {taxAmount} : {}),
-        ...(taxCode ? {taxCode} : {}),
+        ...(typeof updatedTaxAmount === 'number' ? {taxAmount: updatedTaxAmount} : {}),
+        ...(updatedTaxCode ? {taxCode: updatedTaxCode} : {}),
     };
     const allReports = ReportConnection.getAllReports();
     const transactionThreadReport = allReports?.[`${ONYXKEYS.COLLECTION.REPORT}${transactionThreadReportID}`] ?? null;
@@ -3188,7 +3188,9 @@ function updateMoneyRequestDistanceRate(
         data = getUpdateMoneyRequestParams(transactionID, transactionThreadReportID, transactionChanges, policy, policyTagList, policyCategories, true);
     }
     const {params, onyxData} = data;
-    API.write(WRITE_COMMANDS.UPDATE_MONEY_REQUEST_DISTANCE_RATE, params, onyxData);
+    // `taxAmount` & `taxCode` only needs to be updated in the optimistic data, so we need to remove them from the params
+    const {taxAmount, taxCode, ...paramsWithoutTaxUpdated} = params;
+    API.write(WRITE_COMMANDS.UPDATE_MONEY_REQUEST_DISTANCE_RATE, paramsWithoutTaxUpdated, onyxData);
 }
 
 /** Edits an existing distance expense */