According to IRS "the standard mileage rates are used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes."
Personal travel related expenses are not tax deductible. To apply for such a deduction, you need to have an accurate record of the amount of miles you have actually traveled. Either you can provide an estimate of total travel expenses in the form of fuel bills or you can claim the deductions on the basis of mileage rates provided by IRS. It specifies the deduction provided per mile for business, charity, medical or moving related travel. The vehicles include car, van, pickup or delivery truck.
After the brief overview of the rules related to travel related tax reductions, below is the information about new rates in 2018 as issued by the IRA in their latest circular . This will come in effect from January 1, 2018.
It is observed that the business mileage rate and the medical and moving expense rates each have seen an increase of 1 cent per mile from the rates of 2017. The charitable rate, however, remains the same.
One is not eligible for mileage rate based deduction if he/she has already claimed business travel related deductions under 'Modified Accelerated Cost Recovery System (MACRS)'. Also, if deduction under section 179 for a vehicle is already claimed, then one is no longer eligible for this travel related tax deduction.
As per IRS standards, 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.