Payroll & Business Experts Blog

2012 IRS Tax Deductible Standard Mileage Rates

Posted by PrimePay Business and Experts Blog

Jan 6, 2012 7:30:00 AM

2012 irs optional standard mileage ratesThe Internal Revenue Service (IRS) released the 2012 optional 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.  For the most part, they have not changed much since the 2011 mid-year adjustment.

2012 Standard Mileage Deduction Rates
Beginning on January 1, 2012, the standard mileage rates for the use of a car, van, pickup truck or panel truck will be:

  • For Business Related Travel:  55.5 cents per mile driven
  • For Medical or Moving Purposes:  23 cents per mile driven
  • For Charitable Use:  14 cents per mile driven

The rate for business miles driven is unchanged from the 2011 mid-year adjustment that became effective on July 1, 2011.  The medical and moving rate has been reduced by 0.5 cents per mile driven.

See How the Standard Mileage Rates Have Changed Since 2004

How are the Standard Mileage Rates Calculated?
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. 

In a recent press release… Business Mileage Deduction Rate for 2012 Announced by IRS through Partnership with Runzheimer International, they discussed how market conditions impact business decisions related to vehicle costs…

“The detailed information we collect regularly reflects market conditions nationwide and enables the IRS along with many other organizations to make more informed business decisions related to vehicle costs”. "Costs have remained relatively stable since the mid-year adjustment in July 2011,” said Ted Schuerman, senior project leader, Runzheimer International.  

Notice 2012-01 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

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

Limitations on the Use of the Business Standard Mileage Rate
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

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical or charitable expense are outlined in Revenue Procedure 2010-51.

Topics: IRS tax tips & announcements

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