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The standard mileage rates used to calculate allowable auto expense tax deductions have decreased for the first time in six years, reflecting the lower price of gasoline. The new rates apply to federal and state individual income tax calculations for 2016.
The new 2016 rates have dropped from 57.5 to 54 cents per mile for business purposes and from 23 to 19 cents per mile for miles driven for medical or moving purposes. The deductible rate for miles driven in service of charitable organizations remains at 14 cents per mile.
The ability to deduct a qualifying portion of automobile operating costs for business, charitable and medical or moving purposes has been helping individual taxpayers, especially the self-employed, for nearly two decades. The new rate for the 2016 tax year is the first time in six years that the deductible rate per mile has been reduced.
Since 1997, when the current allowable standard mileage deduction methodology was enacted, the rate allowed per mile has been increased 17 times and decreased five times. The allowable deduction rate per mile was at its lowest in 1999 at 31 cents and at its highest rate in the second half of 2008, providing for a deduction of 58.5 cents per mile for the business use of a personal vehicle.
If you have any questions or need more information, please don’t hesitate to contact us at McRuer CPAs.
