Late in the afternoon on Thursday December 16, 2017 the IRS released the 2018 standard mileage rates with Notice 2018-03. These rates are used for calculating deductible amounts related to business mileage, charitable deduction mileage, medical mileage, and mileage related to a qualified move.
For business use of an auto, including car, van, pickup truck, or panel truck, the rate has increased by one cent, up to 54.5 cents per qualified mile driven. 2017 had the lowest mileage rate since the first half of 2011 when it was 51 cents and the rate had been falling since beginning 2016. The increase, even though a penny, is a welcomed one for taxpayers and business owners. As a reminder with business mileage, record keeping is critical as described in “Small Business Owner Deduction Hack.”
The medical mileage rate is currently subject to the hotly debated tax reform bill, Tax Cuts and Jobs Act. Within the draft bill, there are potential changes coming to the medical deduction. We should know more about this in early 2018. For now though, the rate has been increased to 18 cents per qualified medical mile.
The moving mileage rate amount is tied to the medical rate and has increased from 17 cents in 2017 to 18 cents in 2018. There are specific rules related to moves. Again, similar to the medical mileage deduction, this deduction is subject to be changed due to the Tax Cuts and Jobs Act. Both versions of the bill are moving to eliminate the deduction for moving, but would still allow members of the armed forces to take it.
The rate for charitable mileage has not increased since 1998 when it went from 12 cents per mile to 14 cents per mile. Like years of past, it has stayed at 14 cents per mile. To achieve this deduction, the mileage must be for a charitable purpose. For example, volunteering at a church camp and driving equipment from the church to the camp and back. The mileage on the round trip would be deductible at 14 cents per mile.
All in all, although there could be some change related to the medical expense deduction and moving expense deduction, it is good to see the rates buck the trend of decreasing over the last two years and slightly increase. Although it might be only a penny on the business mileage, it can still make a difference. For each 100 business miles driven, it is an extra dollar deduction.
Curious as to how these rate changes will affect your 2018 taxes? Call today and schedule a meeting with Fitzpatrick, Johnson & Associates CPAs, (503) 472-0576.
Fitzpatrick, Johnson & Associates CPAs, is a full service accounting firm providing tax, financial statement, and bookkeeping services based in McMinnville, OR, southwest of Portland, OR.