2012 Standard Mileage Rates Tax Deduction Breakdown and Rules

[Updated for 2012 rates] -The IRS has released 2012 standard mileage rates (effective Jan 1.) for business, charitable, medical or moving. Rates reflect a slight increases over initial 2011 levels, but basically flat from the mid-2011 increase.

• 55.5 cents per mile for business miles driven;
• 23 cents per mile driven for medical or moving purposes (0.5c drop); and
• 14 cents per mile driven in service of charitable organizations.

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[Update July 2011] - Higher gas prices have prompted the IRS to make an unscheduled midyear increase to the standard mileage rate discussed below. The rate will jump to 55.5 cents per mile for travel in July through December, an increase of 4.5 cents from the rate of 51 cents a mile for driving used in January through June.

The rate for driving for medical purposes or if required for a job move rose to 23.5 cents per mile for the second half of the year from 19 cents in the first six months of 2011.

The mileage rate for deducting driving costs related to charitable work is 14 cents a mile, as it has been for years.

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The IRS today issued the 2011 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. The rates have marginally increased over 2010 (see previous update below). Beginning on Jan. 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

* 51 cents per mile for business miles driven
* 19 cents per mile driven for medical or moving purposes
* 14 cents per mile driven in service of charitable organizations

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 as determined by the same study.

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 any vehicle used for hire or for more than four vehicles used simultaneously. Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

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[Previous Update - 2010 Mileage Rate] The IRS today issued the 2010 standard mileage rates used to calculate the tax deductible costs of operating an automobile for business, charitable, medical or moving purposes. Given all the new car stimulus deductions and credits, many folks and business would be claiming some of these deductions when filing their 2009 tax returns. The new rates for business, medical and moving purposes are slightly lower than last year’s, which reflect generally lower transportation costs compared to a year ago (lower gas prices). Also, don’t forget that, a taxpayer is not allowed to deduct any portion of the cost of operating an automobile attributable to personal use.

Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 50 cents per mile for business miles driven (vs. 55 cents in 2009)

• 16.5 cents per mile driven for medical or moving purposes (vs. 24 cents per driven mile in 2009)

• 14 cents per mile driven in service of charitable organizations (the same as 2009)

A taxpayer may deduct the ordinary and necessary expenses the taxpayer pays or incurs during the taxable year in carrying on any trade or business. For example, I claim my transportation expenses when going to see a client or visit a place to do some research. An employee or self-employed individual may deduct the cost of operating an automobile to the extent that it is used in a trade or business. 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 or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. IRS Procedure 2009-54, contains additional details regarding the standard mileage rates.