Standard mileage rates for 2021 are down slightly from 2020 in two categories, the IRS said.
Beginning Jan. 1, 2021, the standard mileage rate for the business use of cars, vans, pickup or panel trucks will be 56 cents per mile, down 1.5 cents from 2020.
It’s the second consecutive year the business use rate has gone down.
The 57.5 cents per mile rate for 2020 was a slight drop from the 2019 rate of 58 cents.
The IRS also set a rate of 16 cents per mile driven for medical or moving purposes for qualified active duty members of the Armed Forces, down a cent from 2020.
And the agency is allowing 14 cents per mile driven in service of charitable organizations, a rate set by statute that’s unchanged from 2020.
The IRS bases its standard mileage rate for business use on an annual study of the fixed and variable costs of operating an automobile.
It bases the rate for medical and moving purposes on variable costs.
The agency reminds taxpayers that the Tax Cuts and Jobs Act prohibits them from claiming a miscellaneous itemized deduction for unreimbursed employee travel expenses.
Taxpayers are also forbidden from claiming a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station.
Taxpayers have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Taxpayers can use the standard mileage rate but must opt to use it in the first year the car is available for business use.
Then, in later years, they can choose either the standard mileage rate or actual expenses.
Leased vehicles must use the standard mileage rate method for the entire lease period, including renewals, if the standard mileage rate is chosen, the IRS said.