If you apply the optional standard business mileage rate, your vehicle use deductible would equal $3,210: According to your records, you drove 4,000 of these miles for personal reasons. At the end of the year, your odometer reads 10,000 more miles than it did the previous year. However, you also drove your truck into town to visit your family, get groceries, and go to the movies. At tax time, simply subtract your personal mileage from your total yearly mileage and multiply this result by the appropriate rate.įor example, say you used your pickup truck to transport hand-polished, organic, free-range ostrich eggs from your ranch to local health food stores and the farmers’ market. If you use your vehicle for both business and personal use, make sure to carefully track your mileage. How to calculate your IRS mileage deduction? However, they didn’t extend this deductible to include the fixed expenses associated with your daily commute. Likewise, the lawmakers who created the charitable use statute didn’t want to tax you for using your vehicle to help the community. They assume you didn’t buy your vehicle just for traveling to the doctor’s office or moving cross-country. If you use your personal vehicle for medical/moving purposes, the IRS allows you to claim a deduction for only the variable transportation costs. The IRS calculates the business mileage rate to cover both the fixed (insurance, depreciation, repairs, maintenance, tires, etc.) and variable costs (gas, oil, etc.) of operating a vehicle. Why does the IRS provide three different mileage rates?īusinesses that operate fleets of vehicles can claim higher mileage rates because they use these vehicles primarily for business purposes. The IRS has set the medical/moving rate to 17 cents per mile (2 cents less than 2016) and the charitable organization rate to 14 cents per mile (statutory, and thus unchanged by the IRS). What are the new 2017 IRS mileage rates?Īs of January 1, 2017, the IRS optional standard business mileage rate will equal 53.5 cents per mile (a half-cent cents less than 2016). and should be used for cars, pickup trucks, vans, and panel trucks. These rates apply to businesses, charities, health care organizations, movers, etc. Organizations of all sizes use the IRS mileage rates to determine appropriate deductibles for their vehicle operation costs.