The Internal Revenue Service has lowered the deductible mileage rate to 54 cents per mile for business miles in 2016 down from 57.5 cents in 2015, the agency has announced.
The new rate, which rolled out Jan. 1, fell 3.5 cents, while the rate for medical and moving expenses fell 4 cents to 19 cents per mile. Charitable organizations can deduct 14 cents per mile traveled in a rate that remains unchanged.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.
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.
Originally posted on Automotive Fleet