Standard Mileage Rates To Go Down In 2010

The IRS announced the standard mileage rates for 2010 this week.  The standard mileage rate is the amount used to calculate the cost of using a personal vehicle for business, charitable or medical purposes.

Starting on January 1^st, the standard mileage rates will be:

Business: 50 cents per mile
Medical or moving: 16.5 cents per mile
Charitable: 14 cents per mile

The standard mileage rates are lower than the 2009 rates to reflect the decrease in the cost of gas.  The IRS studies the cost of operating vehicles to determine the appropriate rate to use for deducting car expenses each year.  If the cost of gas rises significantly during the year, such as it did in 2008, the IRS can do a mid-year increase in the standard mileage rates.

Taxpayers have the option of deducting either the actual cost of operating their vehicle or using the standard mileage rate.  However, the standard mileage rate can not be used for a vehicle if the taxpayer has deducted depreciation on the vehicle, or if they have taken the Section 179 deduction for that same vehicle.

The standard mileage deduction is beneficial for taxpayers because it reduces the amount of recordkeeping that needs to be done, but it can result in a lower tax deduction than the actual cost method for people who have purchased new vehicles.

Source: IRS Announces 2010 Standard Mileage Rate

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