The Internal Revenue Service (IRS) updates the 2020 optional standard mileage rates for the taxpayers and tax professionals throughout United States. These rates will be used in the year 2020 for the calculation of the deductible costs of operating an automobile for business, medical, charitable, or moving purposes.
U.S. 2020 Standard Mileage Rates:
From 1st January, 2020, the standard mileage rates for the use of a car, van, pickup or panel truck will be as following:
- 5 cents per mile driven for business use, down one half of a cent from the rate for 2019.
- 17 cents per mile driven for medical or moving purposes, down three cents from the rate for 2019
- 14 cents per mile driven in service of charitable organizations.
It must be noted that the business mileage rate decreased one half of a cent for business travel driven and three cents for medical and other moving expenses from the rates for 2019. However, the charitable rate is set by statute as well as remains unchanged. Recently, the IRS updated guidelines regarding deductible business, charitable, medical and moving expenses for taxpayers in the United States.
2020 Current IRS Standard Mileage Rates:
Black Ink provides the easiest way to keep track of your business, medical, charitable, and moving mileage in the United States. You can consult us for any further queries. IRS updated Per Diem Rates for Business Travelers in USA. Take assistance of the given table to get a quick summary of standard mileage rates in 2020 by the IRS:
|IRS Mileage Type||Rate per Mile||Effective Date||End Date|
|IRS Medical Mileage Rate||$0.1700||01/01/2020||31/12/2020|
|IRS Business Mileage Rate||$0.5750||01/01/2020||31/12/2020|
|IRS Moving Mileage Rate||$0.1700||01/01/2020||31/12/2020|
|IRS Charitable Mileage Rate||$0.1400||01/01/2020||31/12/2020|
IRS Standard Rates for 2020 Mileage:
- Under the Tax Cuts and Jobs Act, a miscellaneous itemized deduction cannot be claimed by taxpayers for unreimbursed employee travel expenses. Furthermore, a deduction for moving expenses also cannot be claimed by the taxpayers. Only the members of the Armed Forces on active duty moving under orders to a permanent change of station can claim a deduction. To get more details, refer to Proc. 2019-46 (PDF).
- An annual study of the fixed and variable costs of operating an automobile will be used to determine the standard mileage rate for business use.
- The variable costs will be used to determine the rate for medical and moving purposes.
- Taxpayers can always make use of the opportunity to calculate the actual costs of using their vehicle, instead of using the standard mileage rates.
- The business standard mileage rate for a vehicle may not be used by the taxpayers under two conditions. First is when the taxpayer uses any depreciation method under the Modified Accelerated Cost Recovery System (MACRS). And the second condition is when the taxpayers claim a Section 179 deduction for that specific vehicle.
- The business standard mileage rate cannot be used for more than five vehicles that are used at the same time.
- To get the limitations of 2020 standard mileage rate in USA, go through section 4.05 of Proc. 2019-46 (PDF).
- The Internal Revenue Service (IRS) published Notice 2020-05 (PDF) on its official website where you get complete details regarding standard mileage rates 2020.
- The notice also contains the details on the amount a taxpayer must use to calculate reductions to basis for depreciation taken under the business standard mileage rate.
- The maximum standard automobile cost is also detailed in the notice that is used by taxpayer to calculate the allowance under a fixed and variable rate plan.
- For employer-provided vehicles, the IRS Notice provides the maximum fair market value of automobiles first made available to employees for personal use in the year 2020. The employers may use the fleet-average valuation rule in § 1.61-21(d) (5) (v) or the vehicle cents-per-mile valuation rule in § 1.61-21(e).