Mileage for Taxes: Standard Mileage Deduction Rules & Rates
Mileage deduction is a tax write-off used to offset the cost of using a personal vehicle for business reasons. The standard mileage rate changes each year and includes factors like gasoline prices, wear-and-tear and more. In 2018, you can claim 54.5 cents per business mile on your annual return.
There’s no limit to the amount of mileage you can claim on your taxes, but be sure to follow the rules and have a compliant mileage log.
For 2018, The Standard Mileage Rates Are:
- 54.5 cents per mile for business
- 18 cents per mile for medical/moving
- 14 cents per mile for charity.
What are the Standard Mileage Rates for 2018, 2017 and Prior Years?
|Year||Rate per Mile||Dates Covered|
|2018||54.5 cents||1/01/18 - 12/31/18|
|2017||53.5 cents||1/01/17 - 12/31/17|
|2016||54 cents||1/01/16 - 12/31/16|
|2015||57.5 cents||1/01/15 - 12/31/15|
|2014||56 cents||1/01/14 - 12/31/14|
|2013||56 cents||1/01/13 - 12/31/13|
|2012||55.5 cents||1/01/12 - 12/31/12|
|2011||55.5 cents||7/01/11 - 12/31/11|
|2011||51 cents||1/01/11 - 6/30/11|
|2010||50 cents||1/01/10 - 12/31/10|
The standard mileage rate is set by the IRS every year and this is the deductible rate for your drives.
How to Calculate Mileage for Taxes
You can claim mileage on your tax return if you kept diligent track of your drives throughout the year. In 2018, you can write off 54.5 cents for every business mile. You have two options for deducting your vehicle expenses: you can use the standard mileage rate or you can deduct your actual expenses.
With the standard mileage rate, you take the deduction of a specified number of cents for every business mile you drive. To figure out your mileage deduction, simply multiply your business miles by the standard mileage rate for the specific year.
Example: Ed, a salesperson, drove his car 20,000 miles for business during 2018. To determine his mileage deduction, he simply multiplies his business miles by the applicable standard mileage rate (54.5 cents per mile in 2018). This gives him a total mileage deduction for the year of $10,900 (54.5 cents × 20,000 = $10,900).
What Does the IRS Consider to be Business Drives?
With the mileage deduction, the IRS only lets you deduct trips that are for business. Here are the drives that are considered business by the IRS:
|Travel between offices
You can take the mileage deduction write-off for travel from your office or work site to a second place of business.
Driving for business-related errands qualifies as a business drive. This can include going to the bank, office supply store or post office. These small trips add up quickly, and many business owners forget to keep track of these drives.
|Business meals and entertainment
Trips you make to meet with clients or vendors qualify for this deduction. This can include drives for dinner, coffee, drinks, etc.
The miles you drive to and from the airport for a business trip qualify for mileage deduction.
Drives to and from odd job locations can be written off. These can include side-gigs like babysitting, pet care, lawn work and more.
Driving from your office or another work site to meet with customers or clients for business qualifies.
|Temporary job sites
Driving from home to a temporary work location that you expect to last (and does, in fact, last) less than one year.
If you’re looking for work, you may deduct the drives to find a new job. However, you cannot take this deduction if you’re looking for a job in a new industry for the first time.
Can You Deduct Mileage to and From Work?
Generally, you cannot deduct mileage to and from work. The IRS defines the first trip from your house and the last trip back as a non-deductible commute. This is true even if your commute is really, really far. The IRS considers where you live a personal choice and, thus, a personal expense.
Working during a commuting trip is still considered commuting. This includes making business calls, listening to work-related tapes or having business discussions.
Get Around the IRS Commuting Rule with a Home Office
One way to avoid the harsh commuting rule is to have a home office that qualifies as your principal place of business. In this event, you can take a mileage deduction for any trips you make from your home office to another business location.
Your home office will qualify as your principal place of business if it is the place where you earn most of your income or perform the administrative or management tasks for your practice.
How to Claim Mileage on Taxes
If you’re using the standard mileage rate, first calculate the value of your deduction by multiplying your business drives by the applicable rate. You can also add your business parking costs and toll expenses. You’ll also need to tally up your total commute miles and personal (non-commute) miles for the year.
When you’re filling out your Schedule C, you can input your mileage deduction on Line 9. Put your mileage totals on Part IV, Line 44. We’ve put together a mileage deduction guide to help you with the specific details.
Along with the value of your work miles, the IRS will also want to know your starting odometer reading, your commuting miles and your personal, non-commuting miles. If you’re a W2 employee, there are scenarios where you can still write off business miles. You can learn more about that on this article about mileage reimbursements.
Mileage Reimbursement vs. Mileage Deduction
It’s important to note the difference between mileage reimbursement and mileage deduction. A reimbursement is when an employer or client pays you a certain rate for the miles you drive. Mileage deduction is when you take a write-off for the miles you drove on your annual tax return.
The IRS doesn’t require employers or clients to reimburse you for mileage. Many do in order to maintain and attract workers, but there’s no mandated federal mileage rate for non-governmental employees.
How Many Miles Can You Claim on Your Taxes?
There is no limit to the miles you can claim on your taxes; you can claim as many miles as you can substantiate. With that said, there are some claims that can be a red flag for the IRS, including:
- Having a round number like 25,000 miles
- Claiming 100 percent of your miles for business
- Claiming an unusually high number of miles.
Can I Claim Tolls to Work on My Taxes?
Yes, you can deduct business-related parking and toll costs on your taxes. Just make sure you keep compliant records.
Can You Claim Car Insurance and Other Vehicle Expenses on Taxes?
The standard mileage rate includes a lot of the costs related to your vehicle, but it doesn’t include all expenses. If you use the standard mileage rate, you can deduct the following vehicle-related expenses:
- Interest on a car loan
- Parking fees and tolls for business
- Personal property tax you paid when you bought the vehicle, based on its value.
How to Track Mileage for Taxes
The big advantage of the standard mileage rate is that it requires less record keeping. You do need to keep track of how many miles you drive for business and the total miles you drive, but you don’t need to record actual expenses for your car, such as gas, maintenance and repairs.
However, keeping an accurate mileage log can be tedious, and the IRS requires those logs to be fairly detailed. To save yourself time and headache, be sure to review mileage logs the IRS didn’t accept and don’t make the same mistake. You can also use a mileage tracking app like MileIQ to make the process easy and ensure you’re in compliance.
Restrictions on the Standard Mileage Rate Deduction
There are some important restrictions on who can use the standard mileage rate. If you don’t qualify to use it, you must use the more complicated actual expense method.
You must use the standard mileage rate the first year you use a car for business. If you fail to do so, you are forever stuck using that method for that car.
If you use the standard mileage rate the first year, you can switch to the actual expense method in a later year, and then switch back and forth between the two methods after that, subject to certain restrictions. For this reason, if you’re not sure which method you want to use for, it’s a good idea to use the standard mileage rate the first year you use the car for business.
If you choose the standard mileage rate method, you cannot deduct actual car operating expenses. All of these items, as well as depreciation, are factored into the standard mileage rate set by the IRS.
However, you can deduct interest paid on a car loan, as well as parking fees and tolls for business trips. You can’t deduct parking ticket fines or the cost of parking your car at your place of work.
MileIQ captures and logs your drives automatically while you focus on your business.
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