The IRS today issued an advance version of Notice 2016-79 providing the standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes in 2017.
Notice 2016-79 [PDF 13 KB] provides that beginning January 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
In addition to providing the standard mileage rates, Notice 2016-79 provides the amount taxpayers must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that may be used in computing the allowance under a fixed and variable rate (FAVR) plan.
For an automobile the taxpayer owns and uses for business purposes, 25 cents of the 53.5 cents per mile rate in 2017 is attributable to depreciation expense.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile; the standard rate for medical and moving purposes is based on the variable costs as determined by the same study. The mileage rate for charitable miles is set by law.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. The business standard mileage rate can be used for an automobile that the taxpayer either owns or leases.
Rev. Proc. 2010-51 [PDF 49 KB] provides the rules for computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes; states that the number of business miles for the year must be substantiated; and explains what substantiation will be acceptable. Taxpayers using the standard mileage rates must comply with Rev. Proc. 2010-51.
One important restriction imposed by Rev. Proc. 2010-51 is that the standard mileage business rate cannot be used for an automobile if previously:
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.