IRS Mileage Rate Lowered for 2010

The Internal Revenue Service has issued the standard-mileage-reimbursement rate for 2010. The standard-mile rate for business miles driven will be 50 cents per mile in 2010, down from 55 cents per mile in 2009 and from 58.5 cents in the second half of 2008.

The mileage rates for 2010 reflects lower transportation costs compared to a year ago. The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile.

Beginning on January 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 50 cents per mile for business miles driven
• 16.5 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

Employers that use the IRS standard mileage rate to reimburse employees may deduct the reimbursement as a business expense. If employers use the approved rate (or a lower rate), the IRS considers that requirements to substantiate and adequately account for the expense are satisfied without extensive documentation of actual expenses.

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IRS Reduces 2010 Mileage Rate To 50 Cents

DECEMBER 03, 2009 -- The Internal Revenue Service today announced that it is lowering its 2010 standard mileage rate to 50 cents per mile from the 55-cent rate for 2009.

Effective Jan. 1, 2010, IRS's lower standard mileage rate will "reflect generally lower transportation costs compared to a year ago." The rate is calculated by Runzheimer International and is the standard that businesses use to calculate the reimbursable cost to travelers who use their personal vehicles for business.

While not a requirement, 74 percent of 200 corporate traveler buyers said they relied on the IRS rate to reimburse their drivers, according to BTN research fielded this year. Still, IRS said, "Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates." According to BTN's survey, 9 percent of companies formulate their own fixed rate, while nearly 6 percent said they use an internally developed fluctuating rate.

As in past years, gasoline costs are a significant factor in determining the rate, but other costs, including depreciation, are taken into account in formulating the rate, IRS said.

IRS Announces 2010 Standard Mileage Rates

WASHINGTON — The Internal Revenue Service today issued the 2010 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 50 cents per mile for business miles driven
• 16.5 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The new rates for business, medical and moving purposes are slightly lower than last year's. The mileage rates for 2010 reflect generally lower transportation costs compared to a year ago.

The standard mileage rate for business 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 as determined by the same study. Independent contractor Runzheimer International conducted the study.

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 Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for 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 2009-54 contains additional details regarding the standard mileage rates.

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