IRS Lowers Standard Mileage Rates

The Internal Revenue Service has issued its 2010 optional standard mileage rates for calculating the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

The rates for business, medical and moving purposes are slightly lower than last year’s rates, reflecting generally lower transportation costs.

Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car, van, pickup truck or panel truck will be:

•    50 cents per mile for business purposes;
•    16.5 cents per mile for medical or moving purposes; and,
•    14 cents per mile in service of charitable organizations.

The standard mileage rate for business 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 as determined by the same study. Independent contractor Runzheimer International conducted the study.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.

Taxpayers also have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. Revenue Procedure 2009-54 contains additional details on the standard mileage rates.

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