The IRS announced this week the 2018 optional standard mileage rates for business use of a vehicle. For business use of a car, van, pickup truck, or panel truck, the rate will be 54.5 cents per mile, up from 53.5 cents per mile in 2017. Taxpayers can use the optional standard mileage rates to calculate the deductible costs of operating an automobile. The increase is the first in three years.
Driving for medical or moving purposes may be deducted at 18 cents per mile, which is one cent higher than for 2017. Note that the medical and moving expense deductions may be affected by the pending tax reform legislation.
The rate for service to a charitable organization is unchanged, set by statute at 14 cents per mile.
The portion of the business standard mileage rate that is treated as depreciation will be 25 cents per mile for 2018, unchanged from 2017.
For those employers that reimburse employee automobile expenses using an IRS compliant fixed and variable rate (FAVR) plan, the maximum standard automobile cost is now $27,300 for 2018 (down from $27,900 for 2017) for automobiles (not including trucks and vans) and $31,000 for trucks and vans (a decrease of $300 from 2017).
Adapted from an article in the Journal of Accountancy.