Beginning on January 1, 2020, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) are:
- 57.5 cents per mile driven for business use, down one half of a cent from the rate for 2019.
- 17 cents per mile driven for medical or moving purposes, down three cents from the rate for 2019.
- 14 cents per mile driven in service of charitable organizations. (This rate is set by statute and has not changed in many years.)
The standard mileage rate for business use 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.
Although the IRS takes a fresh look at the rates every year, taxpayers should note that under the Tax Cuts and Jobs Act, they cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, except members of the Armed Forces on active duty moving under orders to a permanent change of station.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. Note that a taxpayer 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 five vehicles used simultaneously.
More details are available in Notice 2020-05.
For more information on 2020 mileage rates and other IRS tax changes in the new year, contact our team today. We’re here and ready to help you navigate HR and payroll tax implications and power your business into the New Year.