It’s here – standard mileage rates for deductible costs of using automobiles for business, medical, moving and charitable purposes. IRS announced the standard mileage rates for the year 2016.
To be brought to practice from Jan. 1, 2016, the standard mileage rates will be:
- 54 cents per mile for business purpose drives, it is 57.5 cents in 2015
- 19 cents per mile for medical or moving purpose drives, it is 23 cents 2015
- 14 cents per mile for any charitable organizations drive
As clearly seen the mileage rate has decreased by 3.5 cents for business and 4 cents for moving and medical purpose drives in comparison to 2015.
IRS furthers makes clear that the standard mileage rate for business purpose drives is based on the fixed and variable costs in operating an automobile. This is in contrast to the medical and moving purpose where the mileage rate is purely based on the variable cost.
Even though these rates and their usage is well defined, Taxpayers can use the actual costs in using their automobile rather than the standard mileage rates.
If the Taxpayer has used Modified Accelerated Cost Recovery System (MACRS) or even by claiming Section 179 deduction as a depreciation method, he may not use business standard mileage. Also, as per IRS guidelines, business standard mileage rate should not be used if more than 4 vehicles are used at one time.
Other details of the standard mileage are available in IRS website.