By: Tamara Pow
IRS Announces 2016 Standard Mileage Reimbursement Rates
The Internal Revenue Service has issued the 2016 optional standard mileage rates ( IR-2015-137, Dec. 17, 2015 ):
As of January 1, 2016, the rates for the use of a car, van, pickup or panel truck will be:
54 cents per mile for business miles driven (down 3.5 cents per mile from last year);
19 cents per mile for miles drives for medical or moving purposes (down 4 cents from last year);
14 cents per mile for charitable organizations (this rate is fixed by law).
Of course, taxpayers have the option of calculating the actual costs of using a vehicle rather than using these standard rates. However, if the taxpayer is claiming depreciation under MACRS (Modified Accelerated Cost Recovery System) or is claiming a Section 179 deduction for the vehicle, it may no longer use the business standard mileage rate for that vehicle. Also, the business standard mileage rate cannot be used for more than four vehicles simultaneously. Companies with four or fewer vehicles may use this rate, with the vehicles’ basis reduced by 24 cents a mile, which is the depreciation component of the rate.
A taxpayer may also claim parking costs and tolls, as well as state and local personal property taxes paid on a vehicle. (Kiplinger Tax Letter, Vol. 90, No. 26, December 18, 2015.)
The information appearing in this blog does not constitute legal advice or opinion. Such advice and opinions are provided by the firm only upon engagement with respect to specific factual situations. Specific questions relating to this article should be addressed directly to Strategy Law, LLP.