By Jennifer Jacobus, PHR-CA, SHRM-CP, SDEA
The IRS has issued optional standard mileage rates for 2016. The standard mileage rate for business miles driven will decrease in 2016 by 3.5 cents, from 57.5 cents per mile to 54 cents per mile.
Beginning on January 1, 2016, the standard mileage rates for the use of a car (also including vans, pickups, or panel trucks) will be:
- 54 cents per mile for business miles driven
- 19 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
The medical and moving rate also decreased by four cents per mile from the 2015 rate.
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.
Employers that use the IRS standard mileage rate to reimburse employees may deduct the reimbursement as a business expense. If employers use the approved rate (or a lower rate), the IRS considers that requirements to substantiate and adequately account for the expense are satisfied without extensive documentation of actual expenses.
The employer may deduct reimbursements at a higher rate, but only if the reimbursements reflect the actual cost of the travel and only if the employer keeps adequate records to substantiate its outlays. Reimbursements for tolls, parking, etc., may be deducted in addition to the mileage allowance.