According to a statement from the IRS, starting in 2019, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 58 cents per mile driven for business use, up 3.5 cents from the rate for 2018.
- 20 cents per mile driven for medical or moving purposes, up 2 cents from the rate for 2018.
- 14 cents per mile driven in service of charitable organizations, unchanged from last year.
This is a larger raise than the IRS gave in 2018 for business and medical/moving. The charitable rate is set by statute and hasn’t changed in over 20 years.
The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile, according to the IRS. The rate for medical and moving purposes is based on the variable costs.
The agency also reminds taxpayers that under the Tax Cuts and Jobs Act, taxpayers 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.
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 four vehicles used simultaneously.
Finally, employers should know that these are tax deduction rules, not mandated reimbursement amounts. Employers are allowed to reimburse staff less than this amount, or more if they feel this is justified, although there may be tax implications.