Optional Standard Mileage Rates Announced for 2016

January 13th, 2016

The Internal Revenue Service has issued the 2016 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes.

2016 Standard Mileage Rates

Beginning on Jan. 1, 2016, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be:
• 54 cents per mile for business miles driven (down from 57.5 cents for 2015);
• 19 cents per mile driven for medical or moving purposes (down from 23 cents for 2015); and
• 14 cents per mile driven in service of charitable organizations (unchanged from 2015).

The standard mileage rate for business 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. The charitable rate is based on statute. Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Limitations on Use of Standard Mileage Rates

A taxpayer may not use the business standard mileage rate for a vehicle after claiming accelerated depreciation (including the Section 179 expense deduction) on that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical, or charitable expense are in Rev. Proc. 2010-51.

For Additional Information

Notice 2016-01 contains the standard mileage rates, the basis reduction amounts for taxpayers choosing 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.




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