Optional standard mileage rates for business use of a vehicle will go down beginning  January 1st, 2016, the IRS announced on Thursday. For business use of a car, van, pickup truck, or panel truck, the rate for 2016 will be 54 cents per mile, compared with 57.5 cents in 2015. Taxpayers can use the optional standard mileage rates to calculate the deductible costs of operating an automobile.

STANDARD MILEAGE RATES

  • The standard mileage rate for transportation or travel expenses is 54 cents per mile for all miles of business use (business standard mileage rate).
  • The standard mileage rate is 14 cents per mile for use of an automobile in rendering gratuitous services to a charitable organization.
  • The standard mileage rate is 19 cents per mile for use of an automobile (1) for medical care described in § 213, or (2) as part of a move for which the expenses are deductible.

BASIS REDUCTION AMOUNT For automobiles a taxpayer uses for business purposes, the portion of the business standard mileage rate treated as depreciation is 23 cents per mile for 2012, 23 cents per mile for 2013, 22 cents per mile for 2014, 24 cents per mile for 2015, and 24 cents per mile for 2016.

MAXIMUM STANDARD AUTOMOBILE COST For purposes of computing the allowance under a FAVR plan, the standard automobile cost may not exceed $28,000 for automobiles (excluding trucks and vans) or $31,000 for trucks and vans.