The IRS issued the 2021 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes.
Beginning on January 1, 2021, Notice 2021-2 provides that the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be:
- 56 cents per mile (down from 57.5 cents per mile in 2020) driven for business use;
- 16 cents per mile (down from 17 cents per mile in 2020) driven for medical or moving purposes; and
- 14 cents per mile driven in service of charitable organizations.
The business mileage rate decreased one and one-half of a cent per mile for business travel driven and decreased one cent per mile for medical and certain moving expenses from the rates in effect for 2020. The charitable mileage rate is set by statute and remains unchanged.
An independent contractor conducts an annual study for the IRS of the fixed and variable costs of operating an automobile to determine the standard mileage rates for business, medical, and moving use. Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Code Sec. 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than five vehicles used simultaneously.