IRS announced decreased mileage rates for 2016 Email
News
Tuesday, January 26, 2016 02:00 AM

 

odometerThe Internal Revenue Service issued the 2016 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

As of Jan. 1, 2016, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 54 cents per mile for business miles driven, down from 57.5 cents for 2015
  • 19 cents per mile driven for medical or moving purposes, down from 23 cents for 2015
  • 14 cents per mile driven in service of charitable organizations

The business mileage rate decreased 3.5 cents per mile, and the medical and moving expense rates decreased 4 cents per mile from the 2015 rates. The charitable rate is based on statute.

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 the variable costs.

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

If you have already claimed the cost of that vehicle (deducted the full purchase price from your gross income), you may not use the business standard mileage rate for the vehicle. Nor can you use the mileage rate if you’ve already used the Modified Accelerated Cost Recovery System (MACRS) deduction. However, the business standard mileage rate cannot be used for more than four vehicles used simultaneously. If you business has more than 4 vehicles, you can instead use the actual expense deduction and deduct all operating costs like gas, repairs, and depreciation.

Requirements regarding using the standard mileage rate are included in Rev. Proc. 2010-51Notice 2016-01 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

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