The IRS on December 13, 2016 released the 2017 optional standard mileage rates that will be used to calculate the deductible costs of automobile operation for
- Business purposes
- Charitable purposes
- Medical purposes
- Moving purposes
Starting on Jan. 1, 2017, the standard mileage rates for the use of a car, vans, pickups or panel trucks will be:
- 53.5 cents per mile for business miles driven. The 2016 rate was 54 cents.
- 17 cents per mile driven for medical or moving purposes. In 2016 this rate was 19 cents.
- 14 cents per mile driven in service of charitable organizations. This rate remains unchanged because it is a fixed rate.
The business mileage rate decreased 0.5 cents per mile in 2017 based an annual study of fixed and variable costs of operating an automobile. Furthermore, the medical and moving expense rates decreased by 2 cents per mile in 2017 based on variable costs. The charitable rate is set by the statute and remains unchanged.
Taxpayers aren’t required to use the standard mileage rates, they also have the option of calculating the actual costs of using their vehicle. There is certain limitations regarding using the standard mileage rates. The standard mileage rates can’t be used for more than four vehicles per IRS rules. Also, a taxpayer can’t use the standard mileage rates, if any depreciation method under the following was used:
- Modified Accelerated Cost Recovery System (MACRS)
- After claiming Section 179 deduction
Sources: Rev. Proc. 2010-51 and Notice 2016-79