January 4, 2018

IRS Issues Update to Standard Mileage Rates

By Mark Shterenzer, Staff Accountant, Tax & Business Services

IRS Issues Update to Standard Mileage Rates Tax & Business

The Internal Revenue Service has issued the 2018 updates to the optional standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes.

Taxpayers using a personal vehicle to conduct business can calculate their deductible business travel expenses using specific identification of expenses or by taking a standard rate per miles traveled. Allowable deductible expenses include depreciation, gas, oil, lease payments, insurance, registration fees, repairs, licenses, and tires. If a taxpayer uses a car for both business and personal purposes, expenses must be allocated between business and personal use.

Alternatively, a standard mileage rate can be used, which takes into account the fixed and variable costs of operating a vehicle. Taxpayers cannot elect to use the standard rate when they have taken depreciation under MACRS or have claimed a §179 deduction for that vehicle. Additionally, the standard rate may not be used for more than four vehicles simultaneously.

Other car expenses for parking fees and tolls attributable to business use are separately deductible, whether using the standard mileage rate or actual expensing.

Beginning on January 1, 2018, the standard mileage rates for usage of cars, vans, pickups, and panel trucks will be:

  • 54.5 cents for every business mile driven (up 1 cent from 2017).
  • 18 cents per mile driven for medical or moving purposes (up 1 cent from 2017).
  • 14 cents per mile driven in service of charitable organizations.

If you have any questions on how these changes in rates will affect you or your business, please contact your Marcum tax professional.