IRS Updates Mileage Rates for 2021

Thursday, January 28, 2021 – Beginning on January 1, 2021, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) are:

• 56 cents per mile driven for business use (down 1.5 cents from the rate for 2020).
• 16 cents per mile driven for medical or moving purposes for qualified active duty members of the Armed Forces (down 1 cent from the rate for 2020).
• 14 cents per mile driven in service of charitable organizations. (This rate is set by statute and has not changed in many years.)

The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Although the IRS takes a fresh look at the rates every year, taxpayers should note that under the Tax Cuts and Jobs Act, they cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, except members of the Armed Forces on active duty moving under orders to a permanent change of station.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

In addition to a change in the standard mileage rate, there was a change to the Social Security Wage Base and the Defined Contribution Limit (both increased) for 2021.  These rates and thresholds have been compiled for your quick reference, below.