If you use a car for business purposes and figure your tax deduction using the IRS’s standard mileage rate—you won’t be able to deduct as much for the miles you drive in 2016 as you could in 2015.
As of January 1, 2016, the IRS set the standard mileage rate for business use of an owned or leased auto at 54¢ per mile (3.5¢ lower than the 2015 rate). Other IRS optional standard mileage rates for the use of a car (or van, pickup, or panel truck) are:
Additionally, a rate of 14¢ per mile, which is set by statute, applies to the use of a vehicle for charitable purposes.
The standard mileage rates are used to calculate the deductible costs of operating an auto for business, charitable, medical, or moving purposes. Tax Payers may claim deductions based on the actual costs of using a vehicle. Important to keep in mind though is the use of the standard mileage rate is simpler because it does not require the taxpayer to keep track of specific costs for maintenance, repairs, tires, oil, insurance, etc.
Many employers have an “accountable plan” in place to reimburse employees for their business expenses on a tax-free basis. The standard mileage rate may be used to reimburse employees who use their personal autos for business.
Tyler, Simms & St. Sauveur, CPAs, P.C.
Phone: +1 (603) 653-0044