Beginning on January 1, 2021, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) are:
- 56 cents per mile driven for business use, down 1.5 cents from the rate for 2020.
- 16 cents per mile driven for medical or moving purposes for qualified active duty members of the Armed Forces, down 1 cent from the rate for 2020.
- 14 cents per mile driven in service of charitable organizations. (This rate is set by statute and has not changed in many years.)
The standard mileage rate for business use 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 the variable costs.
Although the IRS takes a fresh look at the rates every year, taxpayers should note that under the Tax Cuts and Jobs Act, they cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, except members of the Armed Forces on active duty moving under orders to a permanent change of station.
Other choices
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. According to the IRS, taxpayers using the standard mileage rates must comply with Rev. Proc. 2019-46. However, a taxpayer is not required to use the substantiation methods described in Rev. Proc. 2019-46, but instead may substantiate using actual allowable expense amounts if the taxpayer maintains adequate records or other sufficient evidence.
More details are available in Notice 2021-02.
If you have questions about the above article or other business tax services, contact Murry Guy, CPA at (334) 887-7022 or by leaving us a message below.
