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Standard mileage deduction rates for 2018

Dec 20, 2017

Relatively stable oil prices this year have shielded most Americans from getting a shock at the pumps, since average gas prices around the country have ranged from $2.41 to $2.76 throughout 2017.   

But prices remain stubbornly above what they were in 2016, so Uncle Sam is giving you a break in the coming year.

If you drive a personal car, van or truck for business in 2018, the amount you can be reimbursed for the associated costs will increase slightly from 2017. The IRS has announced that the optional standard mileage rates for business use of a personal vehicle next year will be 54.5 cents per mile, up 1 cent from the 2017 rate.

The standard deduction for medical or moving purposes also will rise in 2018, to 18 cents per mile, 1 cent higher than for 2017.

The rate for service to a charitable organization, which is set by statute, remains unchanged at 14 cents per mile.

Taxpayers can use the optional standard mileage rates to calculate the deductible costs of operating a personal vehicle based on the number of miles they drive for business, medical care or moving a residence. Only costs that are not reimbursed by an employer or other entity are deductible. Taxpayers always have the option of tracking actual costs of operating their vehicles and using those figures to calculate deductions.

The IRS bases the standard mileage rate on an annual study of the fixed and variable costs of operating an automobile.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

If you have questions about deductibility of mileage, visit the IRS website

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