The IRS released the 2018 optional standard mileage rates that taxpayers and tax professionals can use to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes.
Beginning on January 1, 2018, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 54.5¢ for every mile of business travel driven, up 1¢ from the rate for 2017;
- 18¢ per mile driven for medical or moving purposes, up 1¢ from the rate for 2017; and
- 14¢ per mile driven in service of charitable organizations.
The IRS noted that the business mileage rate and medical and moving expense rates have each increased 1¢ per mile from the rates for this year. The charitable rate, however, is set by statute and stays unchanged. The standard mileage rate for business comes from an annual study of the fixed and variable costs of operating an automobile, while the rate for medical and moving purposes is based on the variable costs. The IRS noted that taxpayers also have the option of figuring the actual costs of using a vehicle instead of relying on the standard mileage rate.
However, taxpayers cannot use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System or after they claim a depreciation deduction under Internal Revenue Code Section 179 for that vehicle. On top of that, the business standard mileage rate cannot be used for more than four vehicles used simultaneously. The IRS describes those and other requirements in Revenue Procedure 2010-51.
For more information about this article, please contact our tax professionals at email@example.com or toll free at 844.4WINDES (844.494.6337).