by Barry L Weller, EA
Beginning on January 1, 2016, the standard mileage rates for the use of a car, van, pickup or panel truck have decreased by three and a half cents for business miles. Medical and moving purpose miles have decreased by four cents while the rate for miles driven in the service of charitable organizations remains unchanged. The standard mileage rates set by the IRS for 2016 are:
54 cents per mile for business miles driven
19 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under MACRS or after claiming a section 179 deduction for that vehicle. Additionally, the business standard mileage rate cannot be used for more than four vehicles used simultaneously. For business use, taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
The average price for a gallon of gas has gone down over the last three years. During 2013, the price range was from a high of $3.79 to a low of $3.15. In 2014, the high was $3.70 and the low was 2.85. In 2015, we saw the year start off around $2.31 per gallon. Then, in the summer, the average price increased to about $2.89 and then decrease to an average of about $2.23 per gallon during November and December. And, in many parts of the country last week, the average price for a gallon of gas was about $2.15. While this is great news for the average driver, the downside of lower gas prices is that the standard mileage rate allowed by the IRS will be decreased.
Barry L Weller, EA is the president of Barry Weller & Associates with offices at 216 E Philadelphia Ave, Boyertown, PA 19512 Phone (610) 367-8280 He is an enrolled agent, licensed to represent taxpayers before the IRS. 12/18/2015