IRS 2018 Standard Mileage Rates | Tax Lawyers Twin Cities

Earlier this month, the IRS issued the option IRS 2018 standard mileage rates to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.Earlier this month, the IRS issued the option IRS 2018 standard mileage rates to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

The new IRS 2018 standard mileage rates are generally higher than the 2017 rates:

54.5 cents per mile for business miles driven (up from 53.50 cents for 2017)

18 cents per mile driven for medical or moving purposes (up from 17 cents for 2017)

14 cents per mile driven in service of charitable organizations (same as for 2017)

The higher IRS 2018 standard mileage rates are caused by higher price for gasoline. The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

According to the IRS Rev. Proc. 2010-51, a taxpayer may use the business standard mileage rate to substantiate a deduction equal to either the business standard mileage rate times the number of business miles traveled. If he does use the IRS 2018 standard mileage rates, then he cannot deduct the actual costs items. Even if the IRS 2018 standard mileage rates are used, however, the taxpayer can still deduct as separate items the parking fees and tolls attributable to the use of a vehicle for business purposes.

It is important to note that a taxpayer does not have to use the IRS 2018 standard mileage rates. He always has the option of calculating the actual costs of using his vehicle rather than using the standard mileage rates. In such a case, all of the actual expenses associated with the business use of the vehicle can be used: lease payments, maintenance and repairs, tires, gasoline (including all taxes), oil, insurance, et cetera.

On the other hand, in some circumstances, a taxpayer cannot use the IRS 2018 standard mileage rates. For example, a taxpayer cannot use the IRS business standard mileage rate for a vehicle after using any MACRS depreciation method or after claiming a Section 179 deduction for that vehicle. Additionally, the business standard mileage rate cannot be used for more than four vehicles used during the same period of time. More information about the limitations on the usage of the IRS 2018 standard mileage rates can be found in the IRS Rev. Proc. 2010-51.