Optional standard mileage rates to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes are changing, starting on Jan. 1.
The new rates are:
- 56 cents per mile for business use, down 1.5 cents from the rate for 2020;
- 16 cents per mile for medical or moving purposes for qualified active duty members of the armed forces, down 1 cent from the 2020 rate; and,
- 14 cents per mile in service of charitable organizations, a rate set by statute and unchanged from 2020.
The rates apply for the use of a car, van, pickup or panel truck. Taxpayers always have the option of calculating the actual costs of using their vehicle, rather than using the standard mileage rates.
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.
The Tax Cuts and Jobs Act disallows a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses unless they’re members of the armed forces on active duty moving under orders to a permanent change of station.
Taxpayers can use the standard mileage rate but must opt to use it in the first year the car is available for business use. Then, in later years, they can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.
For more, see
