The IRS has issued the 2020 optional standard mileage rates used to calculate the deductible costs of operating a vehicle for business, charitable, medical, or moving purposes.
Beginning Jan. 1, 2020, the standard mileage rates for the use of a car, van, pickup or panel truck are:
- 57.5 cents per mile driven for business use
- 17 cents per mile driven for medical or moving purposes, down three cents from the 2019 rate
- 14 cents per mile driven in service of charitable organizations, the same as 2019
The rate for business use declined slightly from last year's 58 cents after it increased from 54.5 cents per mile in 2018.
The standard mileage rate for business is calculated by using an annual study an independent contractor does of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas, and oil.
The business standard mileage rate cannot be applied to more than five vehicles that are used simultaneously.
The rate for medical and moving purposes is based just on the variable costs.
Taxpayers can opt to calculate the actual cost of operating their vehicle rather than using standard mileage rates.
Taxpayers should also note that under the Tax Cuts and Jobs Act, they cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses.