Standard Mileage Rates are updated every year by the Internal Revenue Service. 2021 is no exception to this and the agency is going to announce the new rates that will be effective from January 1st to the rest of the year.
The IRS Standard Mileage Rates are used for taxes and employer reimbursements. If you are a qualified individual who can deduct the mileage expenses based on the mileage rates, use them to multiply it with the number of miles driven. Mostly, self-employed individuals and those who operate their vehicles for medical purposes are qualified.
Employees could deduct their mileage expenses in the past. With the Tax Cuts and Jobs Act of 2017, this is no longer available. Instead, you can request reimbursement from your employer. This is another use of the Standard Mileage Rates. Your employer can reimburse you based on the mileage rates for business.
At the time of writing, the business mileage rate is 56 cents per mile driven. If the employer reimburses you more than 56 cents per mile, the excess amount is going to be taxable. To avoid that, the reimbursement you receive shouldn’t be more than 56 cents per mile.
Current Standard Rates
- 56 cents per mile for business
- 14 cents per mile for charitable organizations
- 16 cents per mile for medical/moving
Other mileage rates for medical/moving and charities are 16 cents per mile and 14 cents per mile, respectively. While the medical mileage deduction is available for everyone, moving isn’t. This is due to the changes made with the TCJA of 2017. It made some significant changes to the mileage deduction. The moving mileage deduction can only be claimed by those who are serving in the U.S. Armed Forces.
On the other hand, mileage rate for those who operate their personal vehicle in the service of a charitable organization is fixed by the Congress. For the future years, the charity mileage rate will remain the same as 14 cents per mile.
On the other hand, the medical mileage rate may be increased by the IRS. From 2019 to 2020, the medical mileage rate was reduced by 2 cents. 2021 might be the year where the IRS pulls back the reduction and increases it to 20 cents per mile once again.