New Optional Standard Mileage Rates for 2020

The IRS recently released the optional standard mileage rates for 2020, as follows:

  • 57.5 cents for every mile of business travel driven (down 0.5 cents from 2019)
  • 17 cents per mile for medical care or moving purposes (down three cents from 2019)
  • 14 cents per mile for gratuitous services to a charitable organization

The standard mileage rate for business use 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.

Due to new provisions created under the Tax Cuts and Jobs Act, business mileage rates cannot be used to claim an unreimbursed employee travel expense as a miscellaneous itemized deduction, nor can moving mileage rates be used to deduct moving expenses incurred for taxable years beginning after December 31, 2017. Members of the Armed Forces moving under permanent change of station orders are exempt, however, from the restriction on moving expenses.

These limitations do not affect business travel expenses that are properly deducted on a taxpayer's Schedule C for self-employed individuals, independent contractors and freelancers.

It’s also important to note that business mileage still cannot be used where Modified Accelerated Cost Recovery System depreciation is taken or after a Section 179 deduction has been claimed for a vehicle, and that the business standard mileage rate still cannot be applied to more than four vehicles at the same time. Taxpayers may still elect to use actual allowable expense amounts instead of the standard rates provided the taxpayer has maintained adequate records or retained otherwise sufficient evidence.

As with all complex tax decisions, the election to use the optional mileage rate can have far-reaching implications. Schneider Downs is always here to help, so please don’t hesitate to contact your local SD tax professional if you have any questions or concerns.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2021 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
CARES Act, Tax BY Austin Nace
Disappointing News for Employers: Employee Retention Credit Ends Before Fourth Quarter of 2021
Welcome News for the Trucking Industry - Clarification of 100% Meals and Entertainment Deduction for Per Diems
Build Back Better Tax Legislation Update – International Tax Changes
Higher Estate Tax Exemption Amount for 2022
Michael Jackson vs. Kenny Pickett
Tax Reform 2021 - Build Back Better: Proposed Changes to Section 199A Qualified Business Income Deduction
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.

×