The standard mileage rates have been released by the IRS, which is used to calculate the deductible costs of operating vehicles for business travel, charitable, medical or moving purpose.
With effect from Jan 1, 2019, the IRS mileage rates for using a vehicle for business purposes are:
- 58 cents per mile driven for business use, up 3.5 cents from the rate for 2018,
- 20 cents per mile driven for medical or moving purposes, up 2 cents from the rate for 2018, and
- 14 cents per mile driven for charitable organizations, this rate is set by statute and remains unchanged.
These standard mileage rates provide small businesses an outline for calculating deductible costs for operating a vehicle for business purposes.
The standard mileage rate for business use is based on fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.
Tax and Jobs Cuts Act
Under this Act, a taxpayer cannot claim a miscellaneous itemized deduction on employee travel expenses that are unreimbursed.
Except members of Armed Force (on active duty moving under orders to a permanent change of station), a taxpayer also cannot claim a deduction for moving expenses. Check the Notice for more details.
The IRS sets these rates every year for small businesses including medical and moving expenses, The numbers are calculated based on averages of what it costs to drive a vehicle for business. The factors include maintenance, repair and the amount of gas used. It’s important to remember the variable rate only applies for moving and medical expenses.
There are some situations where small business cannot use the standard mileage rate, these situations are:
- If the vehicle is a taxicab or some other type of car to hire
- In fleet situations where there are five or more vehicles being used at the same time.
- If the vehicle is being used to deliver mail in rural areas and gets qualified reimbursement under Publication 463 Chapter 4.
- If you claim depreciation or a deduction under section 179.
For details click to read the actual announcement from the IRS.