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IRS Reduces 2016 Business Mileage Rates

by Mike Godfrey, Tax-News.com, Washington

28 December 2015


The US Internal Revenue Service (IRS) has issued the 2016 optional standard mileage rates to be used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes.

Beginning on January 1, 2016, the standard mileage rates for the use of a car (and also vans, pickups, or panel trucks) will be 54 cents per mile for business miles driven, down from 57.5 cents in 2015; 19 cents per mile driven for medical or moving purposes, down from 23 cents in 2015; and 14 cents per mile driven for charitable organizations.

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 variable costs. The charitable rate is based on statute.

However, taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

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, or after claiming a Section 179 deduction (which allows small businesses to immediately deduct the cost of investments in qualifying equipment).

TAGS: compliance | tax | small business | business | tax compliance | Internal Revenue Service (IRS) | tax authority | United States | tax breaks

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