The IRS has announced decreases in the standard mileage rates that taxpayers will use for calculating business, medical, and moving expenses in 2017. Use of the standard mileage rate is a popular alternative to using the actual expense method, which requires taxpayers to keep track of specific costs for maintenance, repairs, tires, gas, oil, insurance, etc.
According to the IRS, the standard mileage rate for use in calculating 2017 business travel expenses is 53.5¢, down from 54¢ in 2016. The new rate also applies where the employer maintains an “accountable” plan for reimbursing employees who use their own automobiles for business-related travel. Additionally, if an employee is provided with a company-owned vehicle for personal use, the employer may use the standard mileage rate to value the benefit.
The IRS also announced a reduction in the mileage rate applicable to medical travel. The new rate is 17¢, down from 19¢. Costs of medical travel are potentially deductible on Schedule A of Form 1040 where the taxpayer has had to travel for medical treatment.
The 2¢ reduction also applies to mileage claimed as moving expenses, decreasing this rate to 17¢. Allowable moving expenses may be taken as an “above-the-line” adjustment where the taxpayer has to move for a job that is at least 50 miles farther from his or her prior residence than the prior employment.
No reduction will apply to the rate allowed for any travel related to charitable work, which remains at 14¢ per mile. This rate is set by statute and is not inflation-adjusted.
Generally, the IRS adjusts the standard mileage rate annually, though it sometimes makes a midyear adjustment when gasoline prices have changed significantly.
The new standard mileage rate is in effect for all business, medical, and moving expenses incurred in 2017. If you have any questions about how the standard mileage rates apply in particular (or deducting travel expenses in general), let us know.