Mileage Rate Update for 2020

Business Mileage

If you drive for business purposes, you probably already know that there is a deductible rate for mileage. The 2020 standard mileage rate for business use is 57.5 cents per mile, a decrease of half a cent from 2019.

What does the standard mileage rate mean?

The standard mileage deduction is a rate that takes into account the costs of owning and operating a vehicle. Generally, two types of costs are considered when this rate is determined: fixed and variable. For example, a fixed cost would be costs related to ownership such as insurance or taxes. On the other hand, variable costs are costs related to the use, such as driving the car around town for business. So, if you have costs like fuel or oil changes, these will not be deductible on your tax return in addition to the use of the standard mileage rate.

A couple of helpful hints for tax prep:

• If you use your vehicle for both business and personal purposes, make sure to give your tax preparer the total annual and the actual business mileage. Many tax professionals use software that requires the entry of the mileage rather than a dollar amount.
• Also, make sure you understand that driving for business purposes is not driving from home to work or vice versa, that’s plain old commuting!

Charitable and Medical Mileage

Did you know that if you drive for charity or medical purposes the mileage for these trips might be deductible? The 2020 rate for charitable driving is 14 cents per mile and 17 cents for medical purposes. Charitable driving means driving on behalf of or in service for the organization. Medical purposes include things such as doctor visits or picking up prescriptions, but not intended for a shopping trip or other errands in between!

For more information on 2020 mileage rates:

https://www.irs.gov/newsroom/irs-issues-standard-mileage-rates-for-2020