The Internal Revenue Service recently released new optional standard mileage rates. The rates are used to calculate deductible costs of operating an automobile for business, charitable, medical or moving purposes. The 2013 rates indicate a 1 cent increase from the 2012 rates.
Beginning January 1, 2013, the rates will be 56.5 cents per mile for business miles driven, 24 cents per mile driven for medical or moving purposes and 14 cents per mile driven in service of charitable organizations.
The standard mileage rate for business is calculated using an annual study of the fixed and variable costs of operating an automobile, van, pickup or panel truck. The rate for medical and moving purposes is based on the variable costs.
There is another option available to taxpayers that do not wish to base their deduction calculations on the standard mileage rates. Taxpayers can calculate the actual costs of using their vehicle instead of using the standard mileage rates.
The standard mileage rate for business miles driven may not be used for a vehicle after any depreciation method under Modified Accelerated Cost Recovery System (MACRS) has been calculated. The use of a Section 179 deduction will also disallow the standard mileage rate for a vehicle. Additionally, the standard mileage rate cannot be used for more than four vehicles used simultaneously.