It is better late than never: The Internal Revenue Service (IRS) has released the regular mileage rates for 2020. The regular mileage rates for the usage of a vehicle, van, pickup, or panel truck will be as follows beginning January 1, 2020:
- For business miles driven, the rate is 57.5 cents per mile (down from 58 cents in 2019)
- 17 cents per mile traveled for medical or relocation reasons, the latter is only for personnel of the Armed Forces (down from 20 cents in 2019)
- 14 cents per mile traveled in support of charity organizations (currently fixed by Congress)
How to calculate mileage rates in 2020
The amount of a deductible business, relocation, medical, or charity cost is calculated using standard mileage rates (miles driven times the applicable rate). Simply multiply the usual mileage rates by the miles driven to utilize the rates.
If you use your automobile for more than one purpose, you should keep detailed records and deduct the expense of personal trips. You can also utilize several rates on your tax return.
Assume you travel 25,000 miles in 2020, for example. 10,000 miles are for personal usage, 2,000 for charity reasons, and 8,000 for medical needs. Your deduction would be calculated as follows:
7,000 personal miles x 0 = $0 (not deductible)
9,000 business miles x .575 = $5,175
4,000 charity miles x .14 = $560
5,000 medical kilometers x .17 = $850
In this case, your total deductible mileage expenditures would be $6,585, plus any connected charges like parking fees and tolls. You would submit your charity and medical mileage deductions on Schedule A on the appropriate lines. Keep in mind that medical miles are still subject to the floor for medical costs, which Congress reduced to 7.5% for 2019 and 2020.
What about business mileage rates in 2020?
Taxpayers may no longer claim a miscellaneous itemized deduction for unreimbursed employee travel expenditures as a result of tax reform. This deduction, along with others like the home office deduction, was removed from Schedule A. This has no effect on any deductions legitimately claimed on a Schedule C for self-employed, freelancers, or independent contractors.
Similarly, the majority of taxpayers may no longer deduct moving expenditures. An exception is made for personnel of the Armed Forces on active service who are ordered to a permanent change of station.
If these rates do not appropriately represent your expenditures, you can deduct actual expenses instead of utilizing the standard mileage rates—though this is a lot more effort.
