Every year the IRS issues its Standard Mileage Reimbursement Rate, which determines the amount that can be used as a tax deduction for business travel. It also serves as a guideline for employers who reimburse their employees for miles driven.
Standard Mileage Reimbursement Rate for 2018
As of January 1, 2019, the rate has been raised to 58.0 cents per business mile driven, 3.5 cents higher than the 2018 rate. The rate for medical or moving expenses has also been raised 2 cents to 20 cents per mile. The rate for charitable purposes remains at 14 cents per mile.
While employers are not required to use the IRS rate to reimburse employees, the IRS will deem employers who make reimbursements up to 58.0 cents per mile as meeting their accounting requirements. As a result, such employers will not be required to report the reimbursements to the IRS, nor will they have to perform any tax withholding. On the other hand, employees who are not reimbursed for their business mileage will be able to deduct 58.0 cents per mile on their individual tax returns.
Matt Grosh is an attorney at Herr & Low. He practices in the areas of estate planning and administration, corporate law, nonprofit organizations and taxation.