Business, Medical, and Moving Standard Mileage Rates Increase for 2019

News, Taxes

The IRS issued the 2019 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes. The IRS also issued the amount taxpayers must use in calculating reductions to a vehicle’s basis for depreciation taken under the business standard mileage rate, as well as the maximum standard automobile cost that may be used in computing the allowance under a fixed and variable rate plan. Notice 2019-2.

Beginning on January 1, 2019, Notice 2019-2 provides that the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 58 cents per mile driven for business purposes;
  • 20 cents per mile driven for medical or moving purposes; and
  • 14 cents per mile driven in service of charitable organizations.

The business rate increased 3.5 cents from the rate in 2018 and the medical and moving expense rate increased 2 cents from the 2018 rates. The charitable mileage rate is set by statute.

It should be noted, however, that the Tax Cuts and Jobs Act of 2017 (TCJA) suspends all miscellaneous itemized deductions that are subject to the 2-percent of adjusted gross income floor under Code Sec. 67, including unreimbursed employee travel expenses, for tax years beginning after December 31, 2017, and before January 1, 2026. Thus, the business standard mileage rate provided in Notice 2019-2 cannot be used to claim an itemized deduction for unreimbursed employee travel expenses during the suspension.

Observation: Notwithstanding the suspension of miscellaneous itemized deductions, deductions for expenses that are deductible in determining adjusted gross income are not suspended. For example, members of a reserve component of the Armed Forces of the United States (Armed Forces), state or local government officials paid on a fee basis, and certain performing artists are entitled to deduct unreimbursed employee travel expenses as an adjustment to total income on Line 24 of Schedule 1 of Form 1040 (2018), not as an itemized deduction on Schedule A of Form 1040 (2018), and therefore may continue to use the business standard mileage rate.

Taxpayers who are eligible to use the standard mileage rate 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 or after claiming a Code Sec. 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for 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 provided in Rev. Proc. 2010-51.

For 2019, the standard mileage rate is 20 cents per mile for use of an automobile: (1) for medical care described in Code Sec. 213; or (2) as part of a move for which the expenses are deductible under Code Sec. 217(g). TCJA suspended the deduction for moving expenses for tax years beginning after December 31, 2017, and before January 1, 2026. However, the suspension does not apply to members of the Armed Forces on active duty who move pursuant to a military order and incident to a permanent change of station to whom Code Sec. 217(g) applies. Thus, except for taxpayers to whom Code Sec. 217(g) applies, the standard mileage rate provided in Notice 2019-2 is not applicable for the use of an automobile as part of a move occurring during the suspension.

The charitable rate is a fixed statutory amount that does not change from year to year. 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.

Notice 2019-2 also contains 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. For automobiles a taxpayer uses for business purposes, the portion of the business standard mileage rate treated as depreciation is 24 cents per mile for 2015, 24 cents per mile for 2016, 25 cents per mile for 2017, 25 cents per mile for 2018, and 26 cents per mile for 2019.
Finally, for purposes of computing the allowance under a fixed and variable rate (FAVR) plan, Notice 2019-2 provides that the standard automobile cost may not exceed $50,400 for automobiles (including trucks and vans).

For a discussion of the rules relating to the use of the standard mileage rate, see Parker Tax 91,110. For a discussion of transportation costs relating to medical care, see Parker Tax 82,535. For a discussion of mileage rates relating to charitable work, see Parker Tax 84,125.

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