The Internal Revenue Service has unveiled higher standard mileage rates for use during the 2018 tax year. The rates are used to calculate the deductible costs of operating a vehicle for business, charitable, medical or moving purposes.
Beginning January 1, 2018, the standard mileage rates for automobiles, vans, pickups or panel trucks will be:
- 5 cents per mile of business travel driven, up 1 cent from the 2017 rate.
- 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.
While the business, medical and moving rates were increased, the charitable rate is set by statute and is unchanged.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The medical and moving rates are based on variable costs.
Taxpayers have the option of either figuring their actual costs of driving a vehicle or using the standard mileage rates.
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. 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.
Check out Notice 2018-03, for more information on 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.