Each year, the Internal Revenue Service (IRS) sets standard mileage rates for business based on an annual study of fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil. Beginning January 1, 2018, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 54.5 cents for every mile of business travel driven, up 1 cent from the rate for 2017.
- 18 cents per mile driven for medical or moving purposes, up 1 cent from the rate for 2017.
- 14 cents per mile driven in service of charitable organizations.
The business mileage rate and the medical and moving expense rates each increased 1 cent per mile from the rates for 2017. The charitable rate is set by statute and remains unchanged.
Here are a few things to keep in mind when considering whether deductions apply to you:
- Business miles are miles you’ve driven specifically for business.
- Business miles are NOT miles driven between home and your workplace. Those are commuting miles and are not deductible.
- You may not use the business standard mileage rate for a vehicle after claiming accelerated depreciation. The standard rate is not available to fleet owners.
- There are maximum standard automobile costs that may be used in computing an allowance under a fixed and variable rate plan.
If you plan to claim a deduction for the business use of a vehicle, now is the time to start keeping records. You must keep a detailed log of business miles and any other expenses you plan to write off. If you choose not to claim standard mileage rate deductions, you may alternatively claim deductions based on the actual costs of using your business vehicle.
For additional information on IRS standard mileage rates, please go to:
https://www.irs.gov/newsroom/standard-mileage-rates-for-2018-up-from-rates-for-2017
We’re tax specialists focused on the accounting needs of emerging businesses. You won’t find a more well equipped or helpful guide. Contact us anytime, and subscribe to our blog for more information that can help keep you safe and compliant.
