Standard Mileage Rates for 2010 Released (IR-2009-111; Rev. Proc. 2009-54)
The IRS has released the 2010 optional standard mileage rates that employees, self-employed individuals and other taxpayers can use to compute deductible costs of operating automobiles (including vans, pickups and panel trucks) for business, medical, moving and charitable purposes. The revenue procedure also provides substantiation rules for employees’ local travel or transportation expenses when a payor (an employer, its agent, or a third party) provides a mileage allowance under a reimbursement or other expense allowance arrangement. Finally, the procedure explains the fixed and variable rate allowance (FAVR) rules that payors can use to reimburse business expenses paid or incurred with respect to an automobile owned or leased by an employee. The mileage rates are all lower than they were for 2009, reflecting generally lower transportation costs.
The updated rates are effective for deductible transportation expenses paid or incurred on or after January 1, 2010; and for mileage allowances or reimbursements paid to, or transportation expenses paid or incurred by, an employee or a charitable volunteer on or after January 1, 2010. Rev. Proc. 2008-72, I.R.B. 2008-50, 1286, is superseded.
The standard mileage rate for business mileage in 2010 will be 50 cents per mile. When a taxpayer uses this mileage rate for automobiles the taxpayer owns, depreciation will be considered to have been allowed at a rate of 23 cents per mile. This depreciation reduces the taxpayer’s basis in the automobile.
A taxpayer computes a deduction using the business standard mileage rate on a yearly basis, in lieu of computing the fixed and variable automobile costs allocable to business purposes, such as depreciation, lease payments, maintenance and repairs, tires, gasoline, oil, insurance, and license and registration fees. However, the taxpayer may continue to claim separate allowable deductions for parking fees and tolls, interest relating to the purchase of the automobile, and state and local personal property taxes. The standard business mileage rate may not be used for automobiles used for hire (such as taxicabs) or when five or more automobiles are owned or leased and used simultaneously by the taxpayer (such as in fleet operations). Rules providing for substantiation of an employee’s ordinary and necessary expenses for local travel or transportation away from home are also provided. Such expenses will be deemed substantiated when the employer, its agent or a third-party provider provides a mileage allowance under a reimbursement or other expense allowance arrangement.
Medical, Moving Mileage Rate
The standard mileage rate for medical and moving expenses will be 16.5 cents per mile.
Charitable Mileage Rate
The standard mileage rate for charitable purposes will remain at 14 cents per mile.
IR-2009-111, FED ¶46,547
Rev. Proc. 2009-54, FED ¶46,548
