IRS Increases Standard Mileage Rates for 2018

Posted on Tue, Dec 19, 2017 ©2021 Drucker & Scaccetti

irs-logo-resized-600.jpgMajor tax changes are likely coming this week. The winners and losers will be debated long after the bill is signed by the President.  However, the IRS has issued increased standard mileage rates for 2018 and all will benefit from the changes.

 

Last week, the IRS issued Notice 2018-03, which provides the 2018 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2018, the standard mileage rates for a car (also vans, pickups or panel trucks) will be:

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

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.

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

 

You may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) 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 are described in Rev. Proc. 2010-51.

 

Notice 2018-03 also provides the amounts you must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost you may use in computing the allowance under a fixed and variable rate plan. 

 

Contact The Tax Warriors® at Drucker & Scaccetti if you have any questions about the tax implications of your vehicle's usage.

Topics: Tax Deductions, Mileage Rates, IRS, 2017-2018, 2018, Car allowance

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