Optional standard mileage rates for use of a vehicle will decrease for business, medical, or moving purposes in 2017, the IRS announced on Dec. 13.
Set annually by the IRS, taxpayers can use the standard mileage rates to calculate the deductible costs of operating an automobile.
Starting on Jan. 1, 2017, the standard mileage rates for the use of a car, van, pickup truck, or panel truck will be:
- 53.5 cents per mile for business miles driven (down from 54 cents for 2016).
- 17 cents per mile driven for medical or moving purposes (down from 19 cents for 2016).
- 14 cents per mile driven in service of charitable organizations (remains the same from 2016; based on federal statute).
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas, and oil.
The medical and moving expense rates are based on the variable costs, such as gas and oil. The charitable rate is set by law.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates, the IRS noted.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.
In addition, the business standard mileage rate is not allowed for more than four vehicles used simultaneously.
The portion of the business standard mileage rate treated as depreciation is 25 cents per mile for 2017, up from 24 cents per mile for 2016.
For purposes of computing the allowance under a fixed and variable rate (FAVR) plan, the maximum standard automobile cost for 2017 is $27,900 for automobiles (excluding trucks and vans), down from $28,000 for 2016, and $31,300 for trucks and vans, up slightly from $31,000 for 2016.
Under a FAVR plan, a standard amount is deemed substantiated for an employer’s reimbursement to employees for expenses they incur when driving their vehicle in performing services as an employee for the employer.
About Jason Bramwell
Jason Bramwell is a staff writer and editor for AccountingWEB. He has nearly 20 years of experience in print and online media as a journalist and editor.