The federal U.S. standard mileage rates are used to compute the deductible expenditures of driving a car for business, charity, medical, or relocation purposes.
The regular mileage charges for the usage of an automobile (including vans, pickups, or panel trucks) in 2021 are as follows:
- 56 cents per mile driven for business use, 1.5 cents down from the rate for 2020,
- 16 cents per mile driven for medical or moving purposes (the latter is only for military members), 1 cent down from the rate for 2020,
- and 14 cents per mile driven in service of charitable organizations – this rate is set by statute and remains unchanged from 2020.
The normal business mileage rate is based on an annual evaluation of the fixed and variable expenses of operating a vehicle. The charge for medical and relocation services is determined by variable expenses.
It is crucial to remember that taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenditures under the Tax Cuts and Jobs Act. Taxpayers cannot deduct relocation expenditures unless they are members of the Armed Forces on active duty transferring to a permanent change of station.
How to calculate standard mileage rates for 2021
For example, suppose you drove 25,000 miles in 2021. 7,000 miles are for personal use, 9,000 miles are for business use, 4,000 are for charity reasons, and 5,000 are for medical needs.
Your mileage tax deduction for 2020 will be calculated as follows:
7,000 personal miles x 0 = $0 (not deductible)
9,000 business miles x .56 = $5,040
4,000 charitable miles x .14 = $560
5,000 medical miles x .16 = $800
In this case, your total deductible mileage-related expenditures would be $6,780, plus any additional fees or tolls.
Taxpayers can also deduct real expenditures rather than using the normal mileage rates, but this is a lot more work.
Taxpayers may utilize the usual mileage rate, but only during the first year, the vehicle is accessible for business usage. Later on, clients might pick between the regular mileage rate and real expenditures. If the standard mileage rate is selected, leased cars must utilize it for the whole lease duration (including renewals).
