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Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. The “standard mileage rates” provide a basis for accumulating and claiming the costs for operating motor vehicles while simultaneously avoiding the administrative burden of maintaining a system to document the actual vehicle operating costs. Additionally, if  accurate written records have been maintained throughout the year, taxpayers have the option to use the method which provides the greater tax deduction. The IRS rate standards provide for a “per mile” rate for three major categories of vehicle operating expenses:
- Business miles driven
- Medical and moving purposes, and
- Charitable organization activity support
While the rates for each major activity are usually set at the end of the previous tax year for the coming year, in the past several years the IRS has revised the rates during the calendar year (usually mid year) to reflect the higher cost per gallon for fuel. Â
IRS Announces 2012 Standard Mileage Rates, Most Rates Are the Same as in JulyÂ
WASHINGTON — The Internal Revenue Service today issued the 2012 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 55.5 cents per mile for business miles driven
- 23 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.
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.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
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 (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.
These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical or charitable expense are in Rev. Proc. 2010-51.
Notice 2012-01 contains 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.