The Internal Revenue Service released on Thursday the 2018 optional standard mileage rates that taxpayers and tax professionals can use to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2018, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be

• 54.5 cents for every mile of business travel driven, up 1 cent from the rate for 2017.

• 18 cents per mile driven for medical or moving purposes, up 1 cent from the rate for 2017.

• 14 cents per mile driven in service of charitable organizations.

The IRS noted that the business mileage rate and the medical and moving expense rates have each increased 1 cent per mile from the rates for this year. The charitable rate, however, is set by statute and stays unchanged.

The standard mileage rate for business comes from an annual study of the fixed and variable costs of operating an automobile, while the rate for medical and moving purposes is based on the variable costs.

The IRS noted that taxpayers also have the option of figuring the actual costs of using a vehicle instead of relying on the standard mileage rates.

However, taxpayers can’t use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System or after they claim a Section 179 deduction for that vehicle. On top of that, the business standard mileage rate can’t be used for more than four vehicles used simultaneously. The IRS describes those and other requirements in Rev. Proc. 2010-51.

The IRS posted Notice 2018-03 on its website Thursday. The notice spells out the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

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Michael Cohn

Michael Cohn

Michael Cohn, editor-in-chief of AccountingToday.com, has been covering business and technology for a variety of publications since 1985.