2019 Standard Mileage Rate by Michael M. Sargent

The optional standard mileage rates for business use of a vehicle will increase significantly in 2019 per the IRS announcement of Dec 14, 2018. For business use of a car, van, pickup truck, or panel truck, the rate for 2019 will be 58 cents per mile up from 54.5 cents per mile in 2018. You can use the optional standard mileage rates to calculate the deductible costs of operating an automobile in lieu of actual cost.  This is faster, easier and often more cost effective.

While the increase is good news, the law known as the Tax Cuts and Jobs Act suspended the miscellaneous itemized deduction for unreimbursed employee business expenses from 2018 to 2025.  Therefore, many of you will not benefit from the increase in the rate.

However, there are exceptions to the disallowance that apply to members of a reserve component of the U.S. armed forces, state or local government officials paid on a fee basis, and certain performing artists. These individuals are permitted to deduct mileage expenses on line 24 of Form 1040, U.S. Individual Income Tax Return.

The standard mileage rate also can be used as the maximum amount an employer can reimburse an employee for operating an automobile for business purposes without substantiating the actual expense incurred.  This can be an important option for business that require and allow employees to use personal vehicles for company business.

For 2019 driving for medical care may be deducted at 20 cents per mile, which is 2 cents higher than for 2018.  If you have substantial uninsured medical; expenses paid with non-Health Saving Account funds this can be an important deduction.  It is important to keep good records of medical need travel.

The rate for service to a charitable organization is unchanged, set by statute at 14 cents per mile.

The portion of the business standard mileage rate that is treated as depreciation will be 26 cents per mile for 2019, 1 cent more than 2018.

If you are an entrepreneur that uses a personal vehicle in your business these changes can significantly reduce your taxable income.

For more information about mileage reimbursement or other tax issues contact the knowledgeable staff of Tax Management & Financial Horizons, 262 923-8100 or visit our web site www.managedtaxes.com.