IRS Standard Mileage Rate for Business Driving

2020 Standard Mileage Rate for Business Driving

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Driving for Uber or another ride-sharing company? Or for your own business or a truck as an independent? No matter what kind of business driving you do, you need to know the IRS standard mileage rate for the year in order to do your business taxes. 

Which Mileage Rate Should You Use?

Use the standard mileage rate for the year of the tax return, not the year you're filing the return. For example, you'll use the 2020 mileage rate for your 2020 tax return, even though you're filing it in 2021.

2020 Standard Mileage Rates 

The Standard Mileage Rate is the maximum per-mile rate allowed by the IRS for calculating mileage for operating a car or truck for business purposes. These are the rates to use when you prepare your 2020 tax return in 2021.

  • 57.5 cents per mile for business miles
  • 17 cents per mile for medical or moving expenses
  • 14 cents per mile driven in service of charitable organizations

The maximum allowance for 2020 a fixed and variable rate (FAVR) plan is $50,400 for automobiles, trucks, and vans.

What Is a FAVR Allowance?

The IRS allows an alternate fixed and variable rate (FAVR) allowance for employee-owned cars. This allowance includes two different payments:

  • A cents-per-mile rate to cover variable costs, like gas and repairs, and
  • A flat amount to cover fixed costs, including depreciation, lease payments, and insurance.

The FAVR allowance is applicable for driving for business purposes, not personal driving.

Standard Mileage Rates for 2021 Driving

The IRS announced the standard mileage rate for 2021 in December 2020. These are the rates to use when you prepare your 2021 business taxes in 2022.

  • 56 cents per mile for business miles (this is a decrease of 1.5 cents from 2020
  • 16 cents per mile for medical or moving expenses (this is a decrease of 1 cent from 2020)
  • 14 cents per mile driven in service of charitable organizations—this rate is set by law and hasn't changed from previous years

The maximum allowance for 2021 a fixed and variable rate (FAVR) plan is $51,100 for automobiles, trucks, and vans.

No Business Mileage Deduction for Employees

The miscellaneous itemized tax deduction for unreimbursed employee expenses, including mileage, has been eliminated under the Tax Cuts and Jobs Act effective tax year. This means you can't take a tax deduction for business driving expenses not paid by your employer. This change is effective with 2018 tax returns and beyond, for miscellaneous expenses you used to be able to claim on Schedule A.

Business mileage rates are only for business driving. If you use a car part of the time for personal use, you must separate out this use and deduct only the cost of business use for the car.

The first step in calculating business mileage is determining which method to use. Businesses have two options for taking expense deductions for mileage: The standard mileage rate or actual costs. Each has advantages and disadvantages.

Using the Standard Mileage Deduction

If you are taking the IRS standard mileage deduction, you will need to provide a listing of all business trips, reason, dates, and mileage.

The two IRS requirements for using the standard mileage rate include:

  1. You must use the standard mileage rate the first year you use a car, then in later years, you can choose to use either the standard rate or actual expense method.
  2. If you lease a car for business use and you choose the standard rate the first year, you must use this rate for the entire lease period.

The IRS has several restrictions on the use of the standard mileage deduction:

  • You can't use standard mileage deduction to calculate mileage if you used MACRS accounting or if you claimed a Section 179 deduction on the vehicle.
  • You can't use the standard mileage deduction for more than four leased vehicles in use at the same time.

Using the Actual Expense Method

You'll need complete information on all expenses associated with your business use of the vehicle if you're claiming actual expenses, including:

  • Gasoline purchases
  • Oil and maintenance expenses
  • Interest expenses on the vehicle loan
  • Lease payments for the tax year
  • Annual depreciation of the vehicle
  • Registration Fees
  • Insurance
  • Repairs
  • Tolls
  • Tires
  • Garage rent
  • Parking fees

Finally, add your business mileage expense to your tax return: 

  • Schedule C for small businesses: Enter car and truck expenses on Line 9.
  • Part IV: Information on your vehicle, unless you are depreciating your business car. 

Previous Years of Business Driving Rates

You might need the information on the driving rates for that year if you're working on a previous year's tax return.

2019 Business, Medical/Moving, and Charitable Driving Rates

  • 58 cents per mile for business miles driven
  • 20 cents per mile driven for medical or moving purposes  
  • 14 cents per mile driven in service of charitable organizations (fixed by Congress, never adjusted for inflation)

2018 Business, Medical/Moving, and Charitable Driving Rates

  • 54.5 cents per mile for business miles driven
  • 18 cents per mile driven for medical or moving purposes  
  • 14 cents per mile driven in service of charitable organizations (fixed by Congress, never adjusted for inflation)

2017 Business, Medical/Moving, and Charitable Driving Rates

  • 53.5 cents per mile for business miles driven 
  • 17 cents per mile driven for medical or moving purposes  
  • 14 cents per mile driven in service of charitable organizations

2016 Business, Medical/Moving, and Charitable Driving Rates

  • 54 cents per mile for business miles driven  
  • 19 cents per mile driven for medical or moving purposes  
  • 14 cents per mile driven in service of charitable organizations