Updated: October 3, 2018 The Mileage Rate 2016 is important for anybody looking for a driving-related deduction. This is also often called the Standard Mileage Rate and is worth 54 cents per mile for business-related drives in 2016.
IRS Mileage Rate 2016: Business, Charity, Medical/Moving
The IRS mileage rate adjusts over time. The IRS hasn't revealed the exact inputs to determine the rate but it factors in gas prices, costs of running vehicles, depreciation and more. In fact, the IRS can change the rate mid-year if gas prices are swinging dramatically. Below were the mileage rates for 2016.
- 54 cents per mile for business miles driven
- 19 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
How to Use Federal Mileage Rates 2016
You can use the federal mileage rates 2016 to take a tax deduction on your returns. Calculating your deduction is simple: multiply your miles by the applicable rate. If you drove 20,000 business miles in 2016, your deduction would be $10,800 (20000 x .54 = $10,800). The same principle applies to finding your charity and medical mileage tax deduction.
What Goes Into the 2016 IRS Mileage Rate?
The IRS understands there is a cost associated with using a personal car for work, medical or charitable reasons. The IRS mileage rate allows people to potentially receive a deduction from their taxable income. The standard mileage rate factors in many things like depreciation, gas, maintenance and more.
What Records Do You Need for Your Mileage Deduction?
If you ever face an IRS audit, your mileage deduction must have an accurate mileage logbook to back it up. For business mileage, you must keep a record of:
- Your mileage
- The dates of your business trips
- The places you drove for business, and
- The business purpose for your trips.
You'll also need to provide the IRS with the total number of miles you drove during the year. This must include your miles for business, commuting and personal driving. Charity, Medical and Moving are considered personal driving even though each has deduction potential.
What is the Current Mileage Reimbursement Rate?
The IRS doesn't force companies to follow a mileage reimbursement rate. Many businesses do align their reimbursement rate with the standard mileage rate, though. This helps to attract and keep users. Consider two equally good jobs and both require you to drive your personal vehicle for work. Wouldn't you likely take the job that includes a reimbursement for miles? Many businesses will reimburse employees 54 cents per mile for every drive associated with work. In 2017, that may go down to 53.5 cents per mile. Check with your employer.
What Does the 2016 Mileage Rate Mean?
The standard mileage rate is how you'll calculate your mileage deduction. The federal mileage rate 2016 is set by the IRS every year. The standard mileage rate for business and medical changes from year-to-year. The charity miles rate has remained at 14 cents per miles for a long time.
Standard Mileage Reimbursement Rate 2016: What Records You'll Need To Keep
Your business may have different reporting requirements. But, in general, most reimbursements reports must include:
- Time and date
- Business purpose
- Places you drove for business
- Mileage
Most companies tie the mileage reimbursement rate to the standard mileage rate. If your company offers less than the standard rate, you can file for a partial deduction.
