The Internal Revenue Service has released the standard mileage rate for 2015.
Under the 2015 rules, the standard mileage rate for the use of a vehicle is:
- 57.5 cents per mile for business use
- 23.5 cents per mile driven as medical or moving expenses
- 14 cents per mile driven for charitable purposes
The 2015 mileage rate reflects an increase of 1.5 cents per mile for the business mileage rate, over 2014.
These mileage rates apply for miles driven starting January 1, 2015. For miles driven during the 2014 calendar year, you must use the 2014 mileage rates.
The medical, moving and charitable mileage rates are staying the same as 2014’s rates.
The business mileage rate increase came as a bit of a surprise. Gas prices actually had gone down in the weeks leading up the new standard’s announcement.
But the rate was likely determined well in advance. In the past, the IRS has said it calculates standard mileage rates based on an annual study of vehicle costs.
Claiming the Standard Mileage Rate for Business
Small business owners and self-employed individuals use the standard mileage rate to calculate the tax-deductible costs for using a vehicle for business purposes.
Taxpayers have the option of using the IRS standard mileage rate instead of keeping track of actual expenses of operating a vehicle. The IRS points out that to claim actual expenses, the taxpayer must maintain “adequate records or other sufficient evidence.”
Most people prefer to use the standard mileage rate because it’s easier and involves less recordkeeping.
Keep in mind, to claim the standard mileage rate, you still must keep track of the actual number of miles driven and the business purpose. Typically that is done by noting mileage information in a notebook, mobile app or software program (such as an accounting program or expense tracking app).
Then you multiply the number of miles driven by the applicable IRS standard mileage rate to determine the mileage deduction.
Using the standard mileage rate is still simpler than trying to calculate all the actual expenses of operating your vehicle for business purposes, such as gasoline, maintenance, etc.
Reimbursing Employees For Use of Personal Vehicles in Business
The standard mileage rate is often also used by employers as the amount to reimburse employees who use their personal vehicles on the employer’s behalf.
Employers are not required to reimburse business travel expenses to employees in most states. However, most employers consider it fair to do so. Many use the standard mileage rate for the reimbursement amount.
The business then deducts as a business expense the amount reimbursed to the employee. As we noted last year:
“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.”
Employees: be sure to check your personnel handbook or company policy to see what it says.
Employers: you may wish to notify employees of the 2015 reimbursement rate. Or, update your handbook if the annual reimbursement amount is stated therein.
For More On IRS Standard Mileage Rates
For more details on the 2015 mileage rate, see the official IRS Notice announcing the new 2015 rates.
There are some exclusions and limitations for when the standard mileage rate can be used. Please check the tax instructions for filing your return, or your tax filing software for instructions. And be sure to consult with your accountant for any specific interpretations.
Rates usually remain in effect for the entire year, once announced. However, in 2011 the IRS increased the business mileage rate in the middle of the year because gasoline costs were so high then.
NOTE: If you are looking for the standard mileage rate for 2014, see the article on the 2014 IRS mileage rate.
If you are looking for the standard mileage rate for 2016, see the article on the 2016 IRS mileage rate.