Decreased IRS Mileage Reimbursement Rates for 2016

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© Jennifer Grady

The Internal Revenue Service issued the 2016 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. The rates show a significant decrease from last year’s rates.

Beginning on Jan. 1, 2016, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

 

  • 54 cents per mile for business miles driven, down from 57.5 cents for 2015;
  • 19 cents per mile driven for medical or moving purposes, down from 23 cents for 2015; and
  • 14 cents per mile driven in service of charitable organizations.

The business mileage rate decreased 3.5 cents per mile and the medical, and moving expense rates decrease 4 cents per mile from the 2015 rates. The charitable rate is based on statute.

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.

Taxpayers always 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 (MACRS) or after claiming a Section 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 in Rev. Proc. 2010-51.  Notice 2016-01 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.

About The Grady Firm, P.C.

The Grady Firm, P.C. provides business and legal counsel to business owners, entrepreneurs and their families.

As a truly global practice, our attorneys act as outside counsel to local businesses, and act as the liaison for foreign companies that wish to expand to the US by providing the business, immigration, employment, and cultural counseling needed for success in a new market.

To schedule a complimentary 15-minute consultation with The Grady Firm’s business and immigration attorneys, call +1 (323) 450-9010, or fill out a Contact Request Form.

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About gradyfirm

The Grady Firm attorneys specialize in helping businesses grow and succeed through employment, business, immigration, and intellectual property law advising for clients in California. In addition, we help foreign entrepreneurs establish a US presence and obtain the appropriate visas for their owners and employees. WE PROVIDE THE FOLLOWING BUSINESS SOLUTIONS: BUSINESS ADVISING: Business formation, contract drafting, coaching/advising, succession planning, lease review, and contract negotiation. EMPLOYMENT LAW: We teach employers how to become compliant with California employment law, draft Employee Handbooks, and providing sexual harassment training. We also help resolve disputes between employers and employees regarding wage and hour, discrimination, and harassment issues. IMMIGRATION: We help build business work forces and reunite families by preparing visa, Green Card, and citizenship applications based on family relations, employment, and investment. INTELLECTUAL PROPERTY: trademarks, copyright The Grady Firm has offices in Beverly Hills and San Diego, California; and serves clients remotely from across the globe. Our attorneys are licensed to practice immigration law in all 50 states. Learn more about us at www.gradyfirm.com.

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