For tax year 2013, the IRS standard mileage deduction rates for the use of a car, as well as vans, pickups and panel trucks, will be
- 56.5 cents per mile for business miles driven
- 24 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
This is not the millage rate for 2012 returns that are being prepared in 2013. The 2012 IRS standard mileage deduction rates are:
- 55.5 cents per mile for business miles driven
- 23 cents per mile driven for medical or moving purposes
- 13 cents per mile driven in service of charitable organizations
IRS agrees that yes, driving has become more expensive.
How the IRS Standard Mileage Deduction Rate is Determined
The IRS claims bases these rates on an annual study it performs on the national average of fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs, that it, it does not take into account the cost of owning a vehicle. Of note — these are the rates no matter where you live. Which is rather unfair — as it certainly cost much more to drive a vehicle in say New York City with higher tolls and higher taxes and higher insurance than say in the Midwest. For those who do live high cost areas, it may make sense to deduct the actual costs — something the IRS allows.
Only business miles are always fully deductible
It is important to note, for many taxpayers, the deductions for medical and charitable miles driven may prove worthless. As income raises, many deductions are “phased out” or eliminated, so the tax brackets wind up more punitive than they appear at first blush. Also, for many households, the AMT applies, so these deductions are largely irrelevant.
These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical or charitable expense are spelled out in Rev. Proc. 2010-51.
Source: IRS Notice 2012-72 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.