I recently switched from 245/45/18 to 245/40/18, and my next tank of gas got like an extra 30 miles on it from around 320 to 350, and my mpg readout went up like over 1 mpg from 20.5 to 22 mpg.

Are these increases correct, or is it a miscalculation by the computer because my overall wheel and tire diameter is now smaller, and therefore the circumference is smaller?

 

Smaller tires means that you would have been traveling slower for the same speed reading on the speedometer. Lower speed (usually) translates to higher MPG therefore you got more miles from a tank of gas.

 

Look here:

http://www.discounttire.com/dtcs/infoTireMath.dos