The IRS released final guidance (IRS Notice 2018-42) on the use of standard mileage rates for 2018. The Tax Cuts and Jobs Act (TCJA) has eliminated the miscellaneous deduction, which is where mileage allowances were calculated, making the use of mileage rates irrelevant for most taxpayers for the tax years of 2018 to 2025. Nevertheless, certain taxpayers can still take advantage of the mileage rate deduction.
Members of a reserve component of the U.S. armed forces, state or local government officials paid on a fee basis, and certain performing artists can still deduct mileage expenses on line 24 of Form 1040, U.S. Individual Income Tax Return, (an above-the-line deduction) and may continue to use the business standard mileage rate, which remains at 54.5 cents per mile for these eligible taxpayers in 2018. Additionally, U.S. armed forces members on active duty who move pursuant to a military order and incident to a permanent change of station can use the moving mileage rate, which is 18 cents per mile for 2018.
The IRS notice does not affect the TCJA updated limit for certain employees who operate a vehicle used for business purposes under an employer's fixed-and-variable-rate (FAVR) plan combining mileage reimbursement and a monthly allowance. The maximum depreciation allowance was raised by the TCJA to $50,000 for passenger automobiles (including trucks and vans) placed in service after Dec. 31, 2017. Unlike the other TCJA changes discussed here, this increase is permanent.
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