On Friday, December 3rd, the Internal Revenue Service (IRS) released the 2011 standard mileage rates that employees, self-employed individuals and other taxpayers use to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. The rates for business, medical and moving purposes rose while the rate for charitable groups was unchanged from 2010.
2011 Mileage Reimbursement Rates
Beginning on January 1, 2011, the standard mileage rates for the use of a car, van, pickup truck or panel truck will be:
- For Business Related Travel: 51 cents per mile driven… up from 50 cents per mile in 2010
- For Medical or Moving Purposes: 19 cents per mile driven … an increase of 2.5 cents per mile over the 2010 rate of 16.5 cents per mile
- For Charitable Use: 14 cents per mile driven… unchanged from 2010
How is the Tax Deductible Mileage Rate Calculated?
The standard mileage rate is based on an annual study of the fixed and variable costs of operating an automobile. The study is conducted by Runzheimer International which provides business vehicle, travel, virtual office and cost-of-living programs, services and benchmark data to businesses nationwide. Runzheimer International, which is an independent contractor, has provided annual vehicle cost data to the IRS since 1980.
In a recent Runzheimer International press release… IRS Establishes Optional Business Mileage Deduction Rate for 2011, they discussed the reasons for the business mileage rate increase…
"Higher fuel prices are the primary reason for the increase in the national optional business deduction,” said Ted Schuerman, senior project leader, Runzheimer International. “Other reasons for the change include depreciation, insurance and maintenance costs. The detailed information we collect annually shows where there are shifts in market conditions nationwide and enables the IRS and many other organizations to make more informed business decisions.”
When Doesn’t the Business Standard Mileage Rate Apply?
U.S. taxpayers cannot use the business standard mileage rate for:
- Vehicles that use any depreciation method under the Modified Accelerated Cost Recovery System (MACRS)
- Vehicles that claim a Section 179 deduction
- Vehicles used for hire
- More than four vehicles used simultaneously
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Revenue Procedure 2010-51 contains additional details regarding the standard mileage rates.