The IRS recently announce the standard rates for business mileage deductions, along with the rates for moving, medical travel and charitable travel.
There were reductions in the primary categories, as you will see in the list below. This is reflective of the reduction in fuel costs over the past year, and is part of a study done annually to determine the fixed and variable costs of operating an automobile.
As of January 1, 2016, the following standard rates apply for operating a car, pickup, van, or panel truck, for the various categories:
- 54¢ per mile for business (was 57.5¢ per mile in 2015)
- 19¢ per mile for moving purposes (was 23¢ in 2015)
- 19¢ per mile for medical purposes (also was 23¢ in 2015)
- 14¢ per mile for charitable purposes (unchanged)
The standard mileage rates are used by anyone who keeps a log of miles for the various categories to be used as deductions against income. The taxpayer always has the option of using actual costs instead of the standard rates.
However, if you use the actual costs method and claim depreciation using an accelerated method of depreciation (including MACRS or Section 179 expensing), you cannot switch back to the standard mileage rate on that particular vehicle later. Plus, you cannot use the business standard mileage rate for more than 4 vehicles simultaneously.
Sterling Raskie, MSFS, CFP®, ChFC®
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