What Is Standard Mileage Rate?
The standard mileage rate, also known as the mileage per diem or deductible mileage, is a rate set by the Internal Revenue Service (IRS) per mile driven by a taxpayer for business or any other deductible reason such as charitable or medical purposes. The taxpayer can deduct the standard mileage rate instead of deducting actual expenses, as the cost of gas and wear and tear on the vehicle are built into the rate.
Breaking Down Standard Mileage Rate
The standard mileage rate is a rate determined by the Internal Revenue Service (IRS) that a taxpayer can deduct per mile driven for business, charitable activities, moving, or medical purposes. The standard mileage rate changes regularly to keep up with inflation. The 2019 rate for miles driven is 58 cents per mile for business purposes, up from 54.5 cents from 2018; 14 cents per mile for charitable purposes, unchanged from 2018; and 20 cents per mile for medical and moving purposes, up from 18 cents from 2018.
The IRS bases these rates on cost data and analysis compiled every year by Runzheimer International, an independent research firm that contracts to the IRS. Runzheimer International uses data from across the country and measures auto insurance premiums, gas prices, maintenance costs, depreciation, and other costs that go into operating a vehicle.
The standard mileage deduction for operating a vehicle for business purposes is based on both the fixed and variable costs of driving a car, while the standard mileage deduction for operating a vehicle for medical or moving purposes is based only on the variable costs of driving a car. The standard mileage deduction for operating a car for charity purposes is based on minimums established by federal law and is meant to reimburse taxpayers for the unreimbursed, out-of-pocket costs of charitable work.
58 cents per mile
The 2019 standard mileage rate for miles driven for business purposes.
While a taxpayer can choose to deduct actual expenses or take the standard mileage deduction, a taxpayer who takes the standard deduction not only has simpler calculations to do but may save money. The taxpayer must own or lease the vehicle to be able to claim the standard mileage rate on it, and a taxpayer can claim the standard mileage rate on up to four vehicles. Commuting to a regular place of business is not deductible, but driving to client meetings or events may be. A taxpayer can deduct mileage when providing services, like volunteering at an event, for 501(c)3 charitable organizations.
Example of Standard Mileage Rate
A taxpayer owns a 2015 Ford Escape and drives it for business purposes. The taxpayer can claim the standard mileage rate for every mile they drive for business purposes on their taxes the next year. To claim this rate, the taxpayer logs all the miles he or she drives in the car for business purposes in a notebook in the car's glove box or on an app on their phone. At the end of the year, the taxpayer multiplies the number of miles driven for business purposes by the 2019 standard mileage rate of 58 cents per mile. If the taxpayer drove 4,500 miles for business purposes in 2019, they would deduct 4,500 times 0.58, for a total of $2,610 for mileage.