December 27, 2016
Notice 2016–79
2017 Standard Mileage Rates
The IRS has announced that the optional mileage allowance for owned or leased autos (including vans, pickups or panel trucks) will decrease by 0.5¢ to 53.5¢ per mile for business travel after 2016. This rate can also be used by employers to provide tax-free reimbursements to employees who supply their own autos for business use, under an accountable plan, and to value personal use of certain low-cost employer-provided vehicles. And, the rate for using a car to get medical care or in connection with a move that qualifies for the moving expense deduction will decrease by 2¢ to 17¢ per mile.
Background
Rev. Proc. 2010–51, 2010–51 I.R.B. 883, provides rules for computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes, and for substantiating, under § 274(d) of the Internal Revenue Code and § 1.274–5 of the Income Tax Regulations, the amount of ordinary and necessary business expenses of local transportation or travel away from home. Taxpayers using the standard mileage rates must comply with Rev. Proc. 2010–51. However, a taxpayer is not required to use the substantiation methods described in Rev. Proc. 2010–51, but instead may substantiate using actual allowable expense amounts if the taxpayer maintains adequate records or other sufficient evidence.
Standard Mileage Rates
The standard mileage rate for transportation or travel expenses is 53.5 cents per mile for all miles of business use (business standard mileage rate). See section 4 of Rev. Proc. 2010–51. The standard mileage rate is 14 cents per mile for use of an automobile in rendering gratuitous services to a charitable organization under § 170. See section 5 of Rev. Proc. 2010–51. The standard mileage rate is 17 cents per mile for use of an automobile (1) for medical care described in § 213, or (2) as part of a move for which the expenses are deductible under § 217. See section 5 of Rev. Proc. 2010–51.
Basis Reduction Amount
For automobiles a taxpayer uses for business purposes, the portion of the business standard mileage rate treated as depreciation is 23 cents per mile for 2013, 22 cents per mile for 2014, 24 cents per mile for 2015, 24 cents per mile for 2016, and 25 cents per mile for 2017. See section 4.04 of Rev. Proc. 2010–51.
Maximum Standard Automobile Cost
For purposes of computing the allowance under a FAVR plan, the standard automobile cost may not exceed $27,900 for automobiles (excluding trucks and vans) or $31,300 for trucks and vans. See section 6.02(6) of Rev. Proc. 2010–51.
Effective Date
IRS Notice 2016-79 is effective for (1) deductible transportation expenses paid or incurred on or after January 1, 2017, and (2) mileage allowances or reimbursements paid to an employee or to a charitable volunteer (a) on or after January 1, 2017, and (b) for transportation expenses the employee or charitable volunteer pays or incurs on or after January 1, 2017.