The Internal Revenue Service has released the 2021 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable and medical purposes.
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The standard mileage rate for business use 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.
The 2021 mileage rates have dropped in part to lower driving costs compared to previous years because of the COVID-19 pandemic. In 2020, much of the nation was subject to shelter in place orders and many businesses were unable to operate as they normally would, which reduced driving activity. National fuel prices are on pace to finish approximately 17% below the national average when compared to 2019 due to decreased business and pleasure travel and there is an oversupply of crude oil.
It is important to note that under the Tax Cuts and Jobs Act, taxpayers can no longer claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. If you are eligible, moving expenses are deductible at a rate of 16 cents/mile for 2021.
