2016 Standard Mileage Rates for Business, Medical and Moving Announced

by: Smith and Howard

December 29, 2015

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The Internal Revenue Services has issued the 2016 optional standard mileage rates which are used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Beginning January 1, 2016 the standard mileage rates for the use of a car, van, pickup or panel truck will be:

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

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

The standard mileage rate for business is calculated using an annual study of fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil. The rate for medical and moving purposes is based on the variable costs, like gas and oil.

Taxpayers have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. A taxpayer cannot use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical or charitable expense may be found in Rev. Proc. 2010-5.

Please note the Notice 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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