The IRS Mileage Rate

Looking for the IRS mileage rate? Should you use it? This page answers all your questions! First of all, what is the IRS mileage rate? Simply put, it is a standard IRS mileage rate for your car expenses. It is an optional and simplified way of figuring the automobile expense deduction on your tax return. Each year, the IRS conducts a study of fixed and variable expenses to determine this rate. Obviously, the price of gas is an importantfactor in the study. For more information on how the IRS determines the standard IRS mileage rate, see Who determines the IRS mileage rate? With the soaring gas prices we've seen lately, it is not a surprise that the IRS mileage rate has increased!

IRS Mileage Rate Information (2009-2014):

Tax Year: Business Moving or Medical Volunteer/Charitable
2014 IRS Mileage Rate 56 Cents/Mile 23.5 Cents/Mile 14 Cents/Mile
2013 IRS Mileage Rate 56.5 Cents/Mile 24 Cents/Mile 14 Cents/Mile
2012 IRS Mileage Rate 55.5 Cents/Mile 23 Cents/Mile 14 Cents/Mile
2011 IRS Mileage Rate (Jul.1 - Dec.31) 55.5 Cents/Mile 23.5 Cents/Mile 14 Cents/Mile
2011 IRS Mileage Rate (Jan.1 - Jun.30) 51 Cents/Mile 19 Cents/Mile 14 Cents/Mile
2010 IRS Mileage Rate 50 Cents/Mile 16.5 Cents/Mile 14 Cents/Mile
2009 IRS Mileage Rate 55 Cents/Mile 24 Cents/Mile 14 Cents/Mile

Why are there two rates for 2011? During that year, gasoline prices jumped up sharply. You might remember that this also happened back in 2005 and 2008. If you drove a car during those time periods, you probably don't need to be reminded of that! In the interest of fairness, IRS raised the business mileage rate. As a precedent, in September of 2005, the business mileage rate had risen by 8 cents per mile from the prior rate that had been in effect for that year. In fact, this is the greatest mileage rate increase seen to date. This happened again in 2008, and the second half of 2008 saw the highest mileage rates for business to date at 58.5 cents per mile! So this happened again on a smaller scale for the 2011 tax year. In July of 2011, the business mileage rate and the moving and medical mileage rate both rose by 4.5 cents per mile. Well, with gas pricing prices going up and down, it is at least good to know that the IRS is trying to stay on top of the game! Having two rates in effect for a tax year complicates things a bit when calculating your mileage for the year, but you will be able to figure it out with the examples that I provide. In any case, complicated or not, it means a higher tax deduction for you. Whereas the IRS mileage rate has come down somewhat from the 2008 levels, it has remained high in the range of 50-55 cent per mile (for business mileage) during the past 6 years.

Using the IRS Mileage Rate Method:

To use the standard IRS mileage rate, simply take your total miles driven during the year,subtract the miles driven for personal use,and then multiply the remaining miles with the appropriate IRS mileage rate from the table above.

IRS Mileage Rate Calculation Example

Your total car mileage for the 2010 tax year was 18,364 miles, of which 7,162 were for personal use and 11,202 were for business. To figure the IRS mileage rate deduction, you would multiply 11,202 miles by the standard 2010 IRS mileage rate for business from the table above (50 Cents/mile).

11,202 Miles x .50 = $5,601.00

This is your business car deduction using the irs mileage rate method.

Note: When using the IRS mileage rate method, keep in mind that the IRS mileage rate includes all costs for operating the car,including gas, wear and tear, depreciation, etc. The standard IRS mileage method does not include parking and tolls; you may claim these deductions on your tax return in their separate categories.


You should also know that not every taxpayer can use the standard IRS mileage rate. More on this a little later in these pages (see link in the paragraph below).


Now that you know a little more about the IRS mileage rate method, you might still have questions. Perhaps you are wondering whether or not you qualify for the standard IRS mileage rate. Also, although the IRS mileage rate method is simple to use, some people find that they are better off not using it. Fore more information, see: Should I use the standard IRS mileage rate method? If you are a subscriber to the Biztax Bits (see link on the left hand navigation bar), I will let you know when the IRS mileage rate changes.



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