The business mileage reimbursement rate for 2021 will decrease 1.5 cents to 56 cents on Jan. 1, 2021, after declining the same amount in 2020, the Internal Revenue Service announced.
For 2021, the agency also decreased the rate for medical or moving purposes for qualified active-duty members of the Armed Forces by 1 cent to 16 cents per mile. Meanwhile, the rate for miles driven in service of charitable organizations remained at 14 cents.
The consecutive yearly declines for business mileage reimbursement followed a 3.5 cent increase in 2019, which went up to 58 cents that year.
Under President Trump's Tax Cuts and Jobs Act, taxpayers can't claim a miscellaneous itemized deduction for unreimbursed employee travel expenses or claim 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, according to a release.
The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating a vehicle. 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.
See all comments