IRS Issues New Standard Mileage Rates

The IRS recently issued the 2015 optional standard mileage rates. Starting Jan. 1, 2015, when calculating the deductible costs of operating an automobile, the new rates will be 57.5 cents per mile for business miles driven, 23 cents per mile driven for medical or moving purposes, and 14 cents per mile driven in service of charitable organizations.

The new business rate increased 1.5 cents from last year, the medical/moving rates decreased 0.5 cents each from last year, and the charitable rate remained at 14 cents. The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas, and oil. The rate for medical and moving purposes is based on the variable costs, such as gas and oil. And the charitable rate is set by law.

Taxpayers always have the option of claiming deductions based on the actual costs of using a vehicle rather than the standard mileage rates. A taxpayer may not use the business standard mileage rate for a vehicle after claiming accelerated depreciation, including the Section 179 expense deduction, on that vehicle.

The IRS mileage rate is applied only when a household member is driving a car. The Handbook goes on to clarify that expenses for “transportation to/from treatment and lodging” for those not driving a car may include “actual cost (e.g., bus fare).” As with all deductions, household members will have to prove use of the transport through documentation. Receipts showing the cost of the transport are the general documentation provided. These can usually be secured in most situations if requested, with the purpose of the cost noted by the resident on the receipt or tied to medical appointment documentation.