A big change was announced by the IRS on Friday for the optional standard mileage rates for business use of a vehicle. This rate will increase significantly in 2019, after increasing only slightly last year. For business use of a car, van, pickup truck, or panel truck, the rate for 2019 will be 58 cents per mile, up from 54.5 cents per mile in 2018. Taxpayers can use the optional standard mileage rates to calculate the deductible costs of operating an automobile.
Because the Tax Cuts and Jobs Act suspended the miscellaneous itemized deduction for unreimbursed employee business expenses from 2018 to 2025, the notice explains that the standard mileage rate can’t be used to claim a deduction for those expenses during that period. However, an exception to that disallowance applies to members of a reserve component of the U.S. armed forces, state or local government officials paid on a fee basis, and certain performing artists. They are permitted to deduct mileage expenses on Schedule 1 line 24 of Form 1040, U.S. Individual Income Tax Return, (an above-the-line deduction) and may continue to use the 58 cents per mile business standard mileage rate.
The standard mileage rate also can be used as the maximum amount an employer can reimburse an employee for operating an automobile for business purposes without substantiating the actual expense incurred.
Driving for medical care or for certain limited moving expense purposes for members of the armed forces may be deducted at 20 cents per mile, which is 2 cents higher than for 2018.
The rate for service to a charitable organization is unchanged, set by statute at 14 cents per mile.
If you have questions about the mileage rates, or other possibly deductions that may impact you or your business, reach out to your accountant today!