New Tax Law Changed Allowable Expense Deductions
The tax legislation pushed through Congress at the end of 2017 wiped out some deductions for individuals and changed some others, particularly those relating to moving, mileage and travel.
Here’s a quick run-down of the changes to keep in mind.
Move-Related Vehicle Expense
The deduction for automobile use in a move has been suspended through Jan. 1, 2026. During that time, no deduction is allowed for auto expense in a move using the IRS mileage rate. An exception is provided for active duty U.S. Armed Forces personnel who move related to a permanent change of station.
Unreimbursed Employee Expenses
The Internal Revenue Service says the new law, called the Tax Cuts and Jobs Act, “also suspends all miscellaneous itemized deductions subject to the 2 percent of adjusted gross income floor. This change affects unreimbursed employee expenses such as uniforms, union dues and the deduction for business-related meals, entertainment and travel.”
Additional guidance may be found in IRS Notice 2018-42.
Increased Depreciation Caps
The tax law also boosts the depreciation limit for passenger automobiles placed in service after Dec. 31, 2017, for the purpose figuring the allowance under a fixed- and variable-rate plan. After the 2017 date, the maximum standard auto cost cannot exceed $50,000 for cars, trucks or vans.
Some Mileage Remains
While some mileage rates have suspended, other rates stay in effect:
- 5 cents for every mile of business travel driven, a 1 cent increase from 2017
- 18 cents per mile driven for medical purposes, a 1 cent increase from 2017
- 14 cents per mile driven in service of charitable organizations, which is set by statute and remains unchanged.