On December 14, 2016 the Internal Revenue Service released the optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes. The business mileage rate decreased half a cent per mile and the medical and moving expense rates each dropped 2 cents per mile from the 2016 rates. The charitable rate is set by statute and remains unchanged.
As of January 1, 2017, the standard mileage rates for the use of a car, van, pickup or panel truck will be:
- 53.5 cents per mile for business miles driven, reduced from 54 cents for 2016
- 17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016
- 14 cents per mile driven in service of charitable organizations, remaining the same
Lower fuel costs were the greatest contributing factor to the reduction in the business and medical rates. 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 IRS reminds taxpayers that they always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rate.
These rates are effective for deductible transportation expenses paid or incurred on or after January 1, 2017, and therefore are applicable to your 2017 tax return. For returns filed this April, the 2016 rates apply.
Complete details about the 2017 standard mileage rates may be found in Notice 2016-79.
Employer Provided Vehicle Maximums
In a related notice, Notice 2017–03, issued January 9th, the IRS also modified the maximum value of employer-provided vehicles for 2017, under section 1.61–21 (d) and (e) of the Income Tax Regulations. Under the adjustment, the maximum value of employer-provided vehicles first made available to employees for personal use in calendar year 2017 for which the vehicle cents-per-mile valuation rule could apply, is $15,900 for a passenger automobile, and $17,800 for a truck or van.
The maximum value for which the fleet-average valuation rule may be applicable is $21,100 for a passenger automobile, and $23,300 for a truck or van.
These values are effective for employer-provided vehicles first made available to employees for personal use in calendar year 2017, and therefore are applicable to your 2017 tax return. For returns filed this April, the 2016 values apply.