The optional standard mileage rates for business use of a vehicle will increase significantly in 2019, after increasing slightly last year, the IRS announced Friday (Notice 2019-2). 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. Taxpayers can use the optional standard mileage rates to calculate the deductible costs of operating an automobile.
Because the law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, suspended the miscellaneous itemized deduction under Sec. 67 for unreimbursed employee business expenses from 2018 to 2025, the notice explains that the standard mileage rate cannot be used to claim a deduction for those expenses during that period.
However, an exception to that disallowance applies 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. They are permitted to deduct mileage expenses on line 24 of Form 1040, U.S. Individual Income Tax Return, (an above-the-line deduction) and may continue to use the 58 cents per mile business standard mileage rate.
The standard mileage rate also can be used under Rev. Proc. 2010-51 as the maximum amount an employer can reimburse an employee for operating an automobile for business purposes without substantiating the actual expense incurred.
Under Notice 2019-2, driving for medical care or for certain limited moving expense purposes for members of the armed forces may be deducted at 20 cents per mile, which is 2 cents higher than for 2018.
The TCJA repealed the moving expense deduction for individual taxpayers from 2018 to 2025, except for U.S. armed forces members on active duty who move pursuant to a military order and incident to a permanent change of station to whom Sec. 217(g) applies.
The rate for service to a charitable organization is unchanged, set by statute at 14 cents per mile (Sec. 170(i)).
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.
To compute the allowance under a fixed and variable rate (FAVR) plan, the maximum standard automobile cost is $50,400 for 2019 for all automobiles (including trucks and vans), an increase of $400 from 2018. The FAVR amounts were recalculated last year after the TCJA retroactively amended the bonus depreciation rules. Under a FAVR plan, a standard amount is deemed substantiated for an employer’s reimbursement to employees for expenses they incur in driving their vehicle in performing services as an employee for the employer.
— Sally P. Schreiber, J.D., (Sally.Schreiber@aicpa-cima.com) is a Tax Adviser senior editor.