The IRS issued Notice 2020-05, announcing the optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes.
Beginning on January 1, 2020, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 57.5 cents per mile for business miles driven, down 0.5 cents from the 2019 rate
- 17 cents per mile driven for medical* or moving purposes, down 3 cents from the 2019 rate
- 14 cents per mile driven in service of charitable organizations (set by statute and remains unchanged)
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.
It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, except members of the Armed Forces on active duty moving under orders to a permanent change of station.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
*Medical mileage is an eligible medical expense as long as the primary purpose of the travel is for and essential to obtaining medical care. This means that the main purpose of travel is to seek medical care.
- Individuals enrolled in the limited health flexible spending account (FSA) can be reimbursed for the cost of mileage associated with dental or vision expenses as long as the plan document permits.
- Individuals enrolled in the standard health FSA can be reimbursed for the cost of mileage associated with their medical, dental or vision expenses as long as the plan document permits.