October 1, 2014

IRS Announces Standard Mileage Rates for 2014

IRS - standard mileage rate 2014

The IRS just announced its standard mileage rates for 2014.  The new rates will be a slight decrease — a half cent — from the 2013 rates for business, medical and moving expenses.

Effective January 1, 2014, the standard mileage rates for the use of a vehicle such as a car, van, SUV or pickup will be:

  • 56 cents per mile for business miles driven
  • 23.5 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

Small business owners, employees, self-employed individuals and other taxpayers can use the standard mileage rate to calculate their tax-deductible costs for using a vehicle for business, charitable, medical or moving purposes.

The IRS points out that these standard mileage rates are “optional.”  That means you have the option of using the IRS-designated standard mileage rate for 2014. Or, in the alternative, you may keep track of your actual expenses of operating the vehicle and claim actual expenses instead.

There are some rules limiting when you can use the standard business mileage rates:

(1) You can claim the standard mileage rate for a maximum of four vehicles used simultaneously.

(2) You cannot use the standard mileage rate if you’ve already claimed a Section 179 deduction for that vehicle.

(3) And you cannot use the standard business mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS).

What if Your Employees Use Their Personal Vehicles for Business?

A frequent question that comes up is “If my employees use their personal vehicles to run business errands or do work for the business, do I have to reimburse the employee at the standard mileage rate?”

In most states you do not have to reimburse expenses to employees — but most employers do so, using the standard mileage rate.  The business can then deduct as a business expense the amount reimbursed to the employee, up to the standard mileage rate.

Of course, any reimbursement to the employee should not be treated as taxable income to the employee. The idea is that you simply are making the employee whole by reimbursing him or her for using a personal vehicle.

If you do not reimburse your employee for business use of a personal vehicle, then the employee may be able to deduct the unreimbursed expense on his or her 1040, Schedule A.  In that case, you as the employer do not get to claim the deduction.

For More On Standard Mileage Rate 2014

For the 2013 tax year, see our article on 2013 mileage rates.

For more detail on 2014 mileage rates, see the IRS site.  Contact your accountant for specific advice in your situation.

15 Comments ▼

Anita Campbell - CEO


Anita Campbell Anita Campbell is the Founder and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses, and also serves as CEO of TweakYourBiz.com.

15 Reactions

  1. Those 1/2 cents add up. But why in the world did they choose a fraction of a cent in the first place?

  2. Hi Robert,

    The IRS announcement said that every year the IRS does a study about prices and costs related to operating a vehicle.

    So my guess– and this is just an educated guess — is that based on the study and then some multiplying and dividing, that’s how they end up with half cents.

    The charitable mileage rate is set by statute according to the IRS announcement, so that’s why it did not change.

    – Anita

  3. Interesting decision announced, but i believe to promote small businesses in a better manner IRS needs to reduce their tariff a little more. Which can really work wonder on promotion basis, also business travel can made on a frequent basis.

  4. Didn’t see this one covered but it’s going to come up at some point, that being if the vehicle gets a deduction, if a trailer is used as well, in conjunction with the vehicle, do you get the deduction for both at the Std IRS rate ? And if so how would you document such mileage for said deduction ?

  5. Using these rates makes life easier especially for small business owners. You may have used your car more for business or if you use different accounting methods you could claim more expenses. But other methods require a lot more paperwork. So, as it is already mentioned this is just one way of doing it.

  6. Suzanne Lewallen

    My employer has recently changed our reimbursement (for those over 7-10,000 per year only) to a fixed/variable reimbursement. We have gone from .54/mile to .17/mile and a fixed reimbursement of $292. Their rationale is that the fixed costs go down and therefore we have been being overpaid and will have to claim this as income. I say WRONG. They are just simply cutting out some of our reimbursement. They are also REQUIRING that we carry full coverage insurance. This totals about a $1,000 difference each month for me. Can I be required to carry full coverage? I have given them documentation on the operating costs, but so far nothing. Just that we can claim the difference on our taxes….. I cry “(*&(&&((&^^% $ 0

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