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Standard Mileage Rates Set by IRS Tumble for 2016

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Dec 17th 2015
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The optional standard mileage rates for 2016 will drop a few cents compared to last year, according to the IRS.

Set annually by the tax agency, the standard mileage rates are used by taxpayers to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes.

According to Notice 2016-01, issued by the IRS on Dec. 17, the standard mileage rates for the use of a car, van, pickup truck, or panel truck, as of Jan. 1, 2016, will be:

  • 54 cents per mile for business miles driven (down from 57.5 cents for 2015).
  • 19 cents per mile driven for medical or moving purposes (down from 23 cents for 2015).
  • 14 cents per mile driven in service of charitable organizations (remains the same from 2015; 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. The rate for medical and moving purposes is based on the variable costs.

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.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical, or charitable expense are in Revenue Procedure 2010-51.

Notice 2016-01 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed- and variable-rate plan.

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