IRS Releases 2020 Mileage Rates

It’s common to see goods and services climb in cost.  Think about what you spent on your most recent vehicle purchase versus what the cost was twenty years ago.

With the new year comes new optional rates from the IRS for 2020.  But this year, some of the rates decreased instead of increased.  These rates are used to calculate the deductible cost of operating an automobile for business, charitable, medical, or moving purposes. The term “automobile” includes any car, van, pickup, or panel truck.

As of January 1, 2020, the standard mileage rates are as follows:

  • For business use of an automobile, the 2020 rate is 57.5 cents per mile (down 0.5 cents from the 2019 rate).
    • Please note that since the Tax Cuts and Jobs Act (TCJA) suspended the miscellaneous itemized deduction for unreimbursed employee business expenses from 2018 to 2025, you cannot use the standard mileage rate to claim a deduction for those expenses. The TCJA did, however, include an exception for members of the U.S. armed forces reserves, state or local government officials who are paid on a fee basis, and some performing artists.
  • Driving for medical or moving purposes may be deducted at 17 cents per mile (down 3 cents from the 2019 rate).
    • As an individual taxpayer, you cannot use the moving expenses deduction from 2018 to 2025 because of the TCJA.  However, the tax code update did include an exception for members of the U.S. armed forces on active duty whose moves are precipitated by a military order.
  • Set at 14 cents per mile, the rate for service to a charitable organization remains the same.

Please note:

  • These mileage rates are optional standards. As a taxpayer, you have the option to calculate the actual cost of operating your vehicle(s).
  • If you choose to claim a Section 179 deduction for your vehicle or use a depreciation method under the Modified Accelerated Cost Recovery System (MACRS), you are no longer eligible to use the business standard mileage rate for the vehicle.

For further detail about what these updated mileage rates mean for you, please contact your Adams Brown advisor.